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Story Publication logo June 19, 2020

In the Brazilian Amazon, China Is Buyer, Trader, Lender, Builder – to Potentially Devastating Effect

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Image by Heriberto Araújo. Brazil, 2019.
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As the world's largest consumer of soy, China's hunger drives Brazil's sales. How the Amazon fits...

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Novo Progresso. Image by Heriberto Araújo. Brazil, 2019.
Novo Progresso. Image by Heriberto Araújo. Brazil, 2019.

In 1928, Henry Ford decided he would develop the Amazon. The American industrialist needed a cheaper and more reliable source of rubber for the millions of tyres produced by his namesake Ford Motor Company near Detroit, and the South American jungle’s trees held promise.

Ford had long believed he manu­factured more than cars. He believed his factories built character, that they civilised the common man. He had tried to launch a project to carry out this vision in Alabama, but faced opposition.

He soon dis­patched American managers who, together with local labourers, cleared land along a tributary of the Amazon River some 700km inland from the Atlantic coast. The site they proposed would support as many as 10,000 workers. Construction started, and Fordlândia was born.

The venture was a disaster. The rubber tree, though native to Brazil, refused to flourish in Fordlândia. The remote location made export to the United States difficult. People died from yellow fever. They died of malaria. More than once, jaguars ate employees’ children.

Fordlândia sits on a tributary of the Amazon River. Image by Melissa Chan. Brazil, 2019.
Fordlândia sits on a tributary of the Amazon River. Image by Melissa Chan. Brazil, 2019.

Ford supported Prohibition, so he forbade alcohol. He promoted square dancing to Brazilian staff as baffled by that as the hamburgers served for dinner. At a particularly low point, workers revolted, smashing property and chanting, “Brazil for Brazilians! Kill all the Americans!” By 1934, the Americans had abandoned Fordlândia.

Almost a century later, the Amazon basin is the epi­centre of new industrial demand, this time for soy and beef. Where one of the great American business magnates failed, China now seeks to satisfy its insatiable hunger, spurring Brazilian prospectors to open up territory to farming and cattle grazing. Beijing may even help build a railroad to better transport the two commodities out of this remote region.

China produces and consumes half the world’s pork, from pigs fed on soy imported from the US and Brazil. (Despite the domestic prevalence of soy products such as tofu, soy milk and soy sauce, 80 percent of the grain in China goes to animal feed.) A bitter trade war with Washington has meant a pivot to Brazil, where 80 percent of all soy exports now go to fatten up hogs in the People’s Republic.

China buys most of Brazil’s beef exports, too. Its ever-growing middle class eats 30 percent more beef than a decade ago, and 2018’s swine flu, which ravaged the country’s pig population, has led to more demand for beef as a replacement.

As with every economic activity in the world, Covid-19 threatens to disrupt these trends, but Chinese President Xi Jinping has celebrated how “the two sides have conducted win-win, fruitful cooperation” that will bring “our two countries more closely together”. For now, soy exports continue apace, and have increased from the same period last year.

Much of Brazil’s soy and beef production is in the Amazonian states of Mato Grosso and Pará. With Beijing as its top trading partner, the environmental future of this patch of the planet – roughly half the size of the continental United States – depends on the stewardship of far-flung China, and the all-too-near vagaries of Brazilian politics.

The world’s largest rainforest plays a critical part in the fight against climate change. Its vegetation is capable of absorbing massive amounts of carbon emissions and its size helps to curb the rise in the Earth’s temperature. However, neither the federal government, the local gover­nors nor the farmers themselves prioritise environmental protection for the international good, even after last year’s sweeping wildfires. Instead, they see immediate local benefits from deforestation and development.

Xi has a welcome partner in Brazil’s President Jair Bolsonaro, who views the Amazon as an economic engine for the country and its settlement as part of the nation’s manifest destiny. “I am fulfilling a mission from God,” Bolsonaro has said.

The “Trump of the Tropics” is open about his nostalgia for Brazil’s 1960s military dictatorship, when pioneers took on the jungle under the government slogan, “A land without men for men without land.” The military encouraged this migration, hacking roads through the forest, including the 4,000km east-west Trans-Amazonian Highway and the 4,500km north-south BR-163. These new roads allowed gold and iron ore miners, loggers and ranchers to colonise the territory, in much the same way as American settlers travelled west in the 19th century.

As with the US, the Brazilian government’s call appealed to those beyond its borders, and immigrants from Europe showed up in search of prosperity. From 1960 to 2000, the region experienced a tenfold increase in inhabitants, to 20 million. Like homesteaders in America, those in Brazil encountered hostile indigenous tribes. Unlike the subju­gation of Native Americans in the US, however, conflicts in Brazil are ongoing, with Bolsonaro lamenting “the Brazilian cavalry hadn’t been as efficient as the American one, which exterminated the Indians”.

Satellite images show the town of Novo Progresso sitting between the green part of the Amazon basin and ecru patches of cleared farmland – between a lush jungle past and a commercially conquered future. Drunken gold prospectors in cowboy hats, flannel shirts and raggedy jeans stumble aimlessly along dirt streets, past weather­board structures reminiscent of the American West of the 1840s. An indigenous family clutches the sides of a truck as it bounces over potholes. A bigger truck rolls by, struggling under the weight of freshly logged tree trunks.

The sound of sermon and song drifts from Pentecostal churches. The vice-to-virtue ratio, however, favours brothels over churches two-to-one, and men find it easy enough to procure the sins of the flesh before crossing the street to the pews for penance.

Novo Progresso. Image by Heriberto Araújo. Brazil, 2019.
Novo Progresso. Image by Heriberto Araújo. Brazil, 2019.

In the early days, the now 25,000-strong town served as the command post for a miner-turned-vigilante, Márcio Martins da Costa, nicknamed “Rambo” for his signature red sweatband and machine-gun tendencies. He murdered the competition, and soon moved beyond gold extraction to the cocaine trade. His spree ended with his death in a shoot-out in 1992 in a 300-man police operation, solidifying his place in Amazon mythology.

These days, the de facto boss is Agamenon da Silva Menezes, rancher and head of the local Rural Producers’ Union, a benign-sounding group that environmentalists accuse of acting more like a cartel, carving up turf for farming and ranching interests. Menezes is under federal investigation as a possible mastermind behind last year’s forest fires, which burned for weeks and sparked global uproar. The government believes ranchers started most of them to open up land to cattle.

Menezes arrived 40 years ago, when Novo Progresso consisted of just a dozen shacks, having answered the government’s call to tame this tough territory. He finds it absurd that he is now being blamed for global climate change, and bristles against those passing moral judgment on his livelihood.

“We have a lot of indigenous reservations that shouldn’t have been created,” Menezes spits disdainfully. “The NGOs created this mess.” He is openly hostile to the Brazilian Institute of the Environ­ment and Renewable Natural Resources (IBAMA), the federal enforcement body tasked with protecting the rainforest.

Under earlier administrations, IBAMA helped to slow the rate of Amazon deforestation, but since coming to power, Bolsonaro has cut the institute’s funding, weakening it to the point that its agents have suspended most opera­tions. Deforestation spiked, rising 30 percent in 2019.

Menezes was thrilled. “Bolsonaro had 79 percent of the votes here,” he says. “If you ran the election again today, we think he’d get 100 percent. We like him.” He may have committed one of the country’s worst arson attacks, and claims to have contracted malaria 80 times, but Menezes does not look like a tough guy. Old, skinny, and short with rumpled hair, he sits, hands clasped, neat stacks of documents on his desk, looking more like an office clerk a few months from his gold watch.

Menezes and the more than 4,000 landowners he represents operate as both ranchers and renegades. They fight for destruction against preservation and what they insist is progress over savagery. Left to fend for themselves for years by an inattentive federal government, they have long adopted the attitude best expressed by a Chinese proverb: “The mountains are high, and the emperor is far away.”

When Brasilia finally tried to assert more control, they pushed back. For a few years, it looked as if environ­ment­alists and indigenous groups almost had an upper hand. But now the Rural Producers’ Union can count on Bolsonaro, who sees the Amazon as they do: a resource for plunder, not protection.

“Interest in the Amazon isn’t about the Indians or the f***ing trees,” the president said in October.

Rancher and union head Agamenon da Silva Menezes. Image by Melissa Chan. Brazil, 2019.
Rancher and union head Agamenon da Silva Menezes. Image by Melissa Chan. Brazil, 2019.

Into this Brazilian saga steps China as buyer, trader, lender and builder. Historically, Beijing has often miscalculated local dynamics, placing too much emphasis on government and business interlocutors, and treating counterparts as if they, too, run authoritarian states where public opinion matters little.

In one parti­cu­larly tone-deaf statement, a Chinese diplomat complimented Brazil’s environmental policy as “one of the most rigorous” at the height of the Amazon fires, failing to understand that a sizeable domestic citizenry was as aghast by the damage as others around the world.

China “initially made the mistake of looking at Latin America as if it was Africa”, says Oliver Stuenkel, an asso­ciate professor of international relations at the Getulio Vargas Foundation, in São Paulo. “[But] you have a very organised civil society in Latin America.” Additionally, the Brazilian constitution mandates the participation of indigenous groups when it comes to decisions impacting their historic territory.

At times, agribusinesses have been forced to negotiate with non-governmental organisations, most notably with Greenpeace in 2006, when parties agreed to a “soy moratorium” to curb deforestation and prevent the conversion of more forest to farmland.

“Chinese companies and government can play a role in supporting existing international, national and sub-national efforts in Brazil towards deforestation-free soy,” wrote Trase, a platform that maps data on deforestation and supply chains. But it is unclear whether China recognises its responsibility or cares enough to take up the cause. The Chinese embassy in Brazil did not respond to requests for comment.

The global food supply chain is not a matter of one country selling goods to another. Brazilian growers and ranchers sell soy and cattle to traders who connect the commodities to the international market. These traders might be Brazilian but many are also from international conglomerates with offices in Brazil.

With soy, for example, the American multinational Cargill runs its largest opera­tions outside the US in Brazil. The state-owned China Oil and Foodstuffs Corporation (Cofco) boasts 7,500 employees in the South American nation. Neither buys exclusively for their home country. They serve the bottom line, which might mean Cargill sending soy to China or Cofco shipping it to Europe.

Still, many Chinese agribusinesses are state-owned enterprises, and soy is one component of the country’s food security strategy. That means even as commercial interests drive these companies, they must align with government goals.

The Communist Party’s most recent five-year plan emphasised the need to achieve “basic self-sufficiency” in grains, but China cannot do so with soybeans – it doesn’t have enough arable land and water to grow the water-intensive crop. To ensure a steady supply, the state must therefore – in a way the US cannot – be trader, lender and builder in addition to buyer.

“Money talks, money buys, and it kills,” warns Dôto Takakire, a leader of the indigenous Kayapó tribe. “They are going to deforest more to plant more soy.”

Dôto Takakire, a leader of the Kayapó tribe. Image by Melissa Chan. Brazil, 2019.
Dôto Takakire, a leader of the Kayapó tribe. Image by Melissa Chan. Brazil, 2019.

Sinop city, home to 140,000 souls in Mato Grosso, south of Novo Progresso, was built on the wealth of soy farmers. It is corporate farming’s stronghold, with gated suburban communities that wouldn’t look out of place in Palm Springs. It is an incongruous place to meet the tribal leader to talk about the Ferrogrão, or “grain train”, a controversial rail project that would move soy from Sinop, through the wilderness to an Amazon tributary, the Tapajós River, and on to ships bound for China and elsewhere.

This is where China the builder comes in, with state-owned companies such as China Railway Engineering, Shanghai Pengxin Group and China Communications Construction all expressing interest in bidding for the US$3.1 billion project. If any of them win, Ferrogrão would effectively become part of the Belt and Road Initiative, Beijing’s international infrastructure development plan that has forged connections from airports in South Asia to seaports in the Mediterranean.

China the lender may also step in to support the project financially, although given the global economic uncertain­ty, it may act more cautiously now. State construction companies often work together with state-run banks. The Brazilian government says it has secured funding for Ferrogrão without divulging details, but last year Beijing pledged to invest US$100 billion in Brazil’s agricultural sector.

“China should stop this,” Takakire says. As a signatory to the Paris Agreement, China pledged to meet ambitious targets to reduce the carbon intensity of its economy. But it might feel more ambivalent about its environmental responsibilities in other countries, especially when soy is such a critical commodity.

The military has been tasked with paving roads. Image by Heriberto Araújo. Brazil, 2019.
The military has been tasked with paving roads. Image by Heriberto Araújo. Brazil, 2019.

For years, American farmers shipped a steady supply of soy to China. The reliability of US infrastructure – trucks, trains and ports – made them a preferred seller over Brazilians. American farmers also benefited from govern­ment subsidies. Even with a soybean variety richer in protein than its North American competitors, Brazil had a tough time competing.

As its agribusinesses expanded across the Amazon, the roads bisecting vast tracts of soy underscored Brazil’s status as a developing country: often unpaved, they turned into muddy, unnavigable goop during the rainy season, making delivery dates to international customers unpredictable.

Agribusinesses in Brazil envisioned Ferrogrão, a railway that would cut through the jungle, as a solution to the problem. A few prominent growers even pulled together a feasibility study in an attempt to convince the government to build it. But administration after administration failed to prioritise the plan, the same way they failed to care about uneven roads – until Bolsonaro came along.

The president had triumphed with the backing of farmers, and he took no time to show his gratitude, greenlighting Ferrogrão. Until its completion – in a move echoing the deployment of soldiers to the region in the 1960s – Bolsonaro ordered army engineers to finish paving BR-163 to ease the flow of trucks transporting soy along the 4,500km highway.

Despite Covid-19’s economic disruption, Brazil’s minister of infrastructure, Tarcísio Gomes de Freitas, maintains the bidding process for Ferrogrão will start early next year.

“It is a completely sustainable project that will lower the cost of freight,” he says. “The railroad emits about a third [of emissions] compared to the road transport [currently used].” He also pledged not a single tree would be felled in the process.

That promise seems dubious at best, deceitful at worst. Over the past year, the Kayapó have encountered more trespassers in their territory, often loggers or miners armed with guns, emboldened by the president’s carte blanche attitude to the region’s development. Such men recently murdered five members of the Guajajara tribe.

According to Human Rights Watch, illegal loggers and invaders have killed more than 300 people over the past decade, the victims often armed with nothing but bows and arrows.

Ferrogrão’s planned route avoids two Kayapó reserves, but having spent most of his life fighting to preserve his people’s land, Takakire knows any new route will bring trouble, like with the railway built across the Amazon in the 80s. Connecting the world’s largest iron ore mine, the Carajás, to the Atlantic port of Ponta da Madeira, itsplit indigenous lands in two.

Takakire leans forward. He has tattoos across his cheeks and chin, and stripes down his arms. “Money can divide us and weaken indigenous leadership,” he says.

In another echo of tribal politics once common in the American West, when some groups cut deals with settlers while others fought back, a few indigenous villages have accepted bribes from prospectors in return for land use. This division has weakened Kayapó resistance. Takakire pauses, then nods, “We will set up a new village on the rails of Ferrogrão.” If necessary, at least his faction of the tribe will launch its own Occupy-style movement against the swooping capitalists in the Amazon.

Josenildo dos Santos Munduruku, of the Munduruku tribe, says he may have to relocate to avoid confrontation with loggers. Image by Melissa Chan. Brazil, 2019.
Josenildo dos Santos Munduruku, of the Munduruku tribe, says he may have to relocate to avoid confrontation with loggers. Image by Melissa Chan. Brazil, 2019.

Visiting a member of the Munduruku tribe a few days later, we witness our guide from a local NGO backing his vehicle up to face the open road, a procedure his team developed for quick getaways, and a reminder of hostility in the area. Josenildo dos Santos Munduruku lives in one of four villages in this patch of northern Pará state, about 100km east of Fordlândia, surrounded by vast soy fields he does not own. He has spent years battling to preserve 13,000 hectares for his tribe.

“We fight for our survival,” he says, sitting on the porch of his brick-and-timber, tin-roofed shanty. “Every day, every year, we’re being suffocated by agribusiness.”

His four-year-old son peeks shyly from the door, the setting sun drawing golden striations along the ground, as dos Santos speaks of spending hours fishing and collecting native acai berries. More than anything, illegal loggers worry him. They advance before the farmers, essentially clearing the forests for subsequent soy growers. Their guns make tribal surveillance dangerous. Dos Santos says he would like a drone, as other tribes have, which would make monitoring the area safer and avoid direct confrontation. If he cannot stop the loggers, he acknowledges he will have no choice but to relocate.

The trouble with the Amazon is that the happiness of one often seems dependent on the tragedy of another. Neri José Chiarello is one of the jungle’s winners. He produces 130,000 tonnes of soybeans and 150,000 tonnes of corn every year. Double trailer trucks queue outside his operations near Sinop, near rows of huge silos. The air smells of baked bread and exhaust fumes.

Once filled, the rigs drive north for a few days, along the newly paved BR-163, up to the barges on the Tapajós River. Chiarello looks forward to the Ferrogrão, saying it would move an additional 40 million tonnes of grain to port.

Sinop, in Mato Grosso. Image by Heriberto Araújo. Brazil, 2019.
Sinop, in Mato Grosso. Image by Heriberto Araújo. Brazil, 2019.

On March 21, the International Day of Forests, the WWF and Chinese production team PaperClip released a video explaining how the destruction of the Amazon is connected to the global demand for soy and beef. At one point, the narrator says, “Brazilian soybean production cannot be cut because it needs to sell to the world’s biggest buyer, China.” The clip led to an online uproar, with Chinese netizens asking why they should cut back on meat when Americans continue to consume twice as much. PaperClip pulled the story.

Chinese citizens may deny it, but China and Brazil have a symbiotic relationship, which will make an indelible impact on the world environment. Before his election victory, Bolsonaro had run on an anti-China platform, fanning the flames of xenophobia and warning that Beijing was “buying Brazil”. But like so many politicians, campaign rhetoric changed once he took office and faced the realities of doing business with the second-largest economy in the world. Under Bolsonaro, ties with China have only grown.

Beyond soy and beef, the recent collapse of Brazilian air­craft manufacturer Embraer’s planned partnership with Boeing may now turn into a deal with a Chinese company. This spring’s diplomatic fracas with Eduardo Bolsonaro, the president’s son, who blamed Beijing for Covid-19 and called it a “Chinese virus”, has not fundamentally altered bilateral relations.

Chinese diplomats snapped back with their new “Wolf Warrior” sass – their more vocal worldwide strategy – but soon moved on to delivering masks and ventilators to grateful Brazilian governors.

A soy processing plant in Brazil. Image by Melissa Chan. Brazil, 2019.
A soy processing plant in Brazil. Image by Melissa Chan. Brazil, 2019.

At the time of writing, more than 40,000 Brazilians have died from Covid-19, and Bolsonaro faces a leadership crisis and possible impeachment. But even if Brazil sees extraordinary political change, it will continue to need China to purchase its commodities. If a new administration comes along, that flow of goods won’t stop, but new politi­cal will may demand more sustainable terms for how soy is grown and cattle raised.

The great irony is that soy is native to China. But it was the US in the middle of the 20th century that took it, developed it and popularised it into the king commodity it has become. In a misstep in 1973, then president Richard Nixon briefly banned soybean exports when he thought the US might run out. That provided enough of a window for Brazilian farmers to elbow in to the global market.

Today, American soy sellers compete against surging Brazilian producers for Chinese customers in a contest few people know much about, but with high stakes for humanity. Scientists warn that past a certain point, the Amazon rainforest will not regenerate and instead fall into a death spiral, in a process known as “dieback”.

Henry Ford the visionary, it turns out, set his eyes on the Amazon too soon. He even experimented with soy, devoting money and time at his research labs to studying the grain, at one point testing its properties as a textile by sporting a soy-based suit. By then, it was already 10 years since he had exited Fordlândia. If only he had known how much better soy thrives in the Amazon than rubber trees.

This story was supported by the Pulitzer Centre.

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