GENET archive


7-Business: U.S. farmers move to Brazil

-------------------------------- GENET-news -------------------------------

TITLE:  U.S. farmers breaking ground in Brazil
SOURCE: Chicago Tribune, by Andrew Martin
DATE:   14 Jun 2004

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U.S. farmers breaking ground in Brazil

Forty-five hundred miles from his hometown, on 9,000 desolate acres of
sandy, red dirt, John Carroll is chasing his version of the American dream.

A 23-year-old who grew up on a farm in Carthage, Ill., Carroll moved to
Brazil in the summer of 2003, within a month of marrying his college
girlfriend and earning a master's in business from Western Illinois

He now manages the South American branch of his family's agricultural
enterprises, Carroll Farms Brazil: an expanse that is twice as big as the
family's Illinois farm and boasts 25 full-time employees, state-of-the-
art equipment and weather that rivals San Diego's.

"At home, we can't expand," said Carroll, bumping along a rutted dirt
road between rows of cotton and soybeans. But in Brazil, he said, "people
are moving out their capital, opening [farmland] as fast as they can."

Carroll is one of a small but growing group of U.S. farmers and
entrepreneurs who, frustrated by high land costs and lack of
opportunities in rural America, have moved to Brazil to seek their fortunes.

Estimates of how many U.S. farmers have relocated to Brazil usually hover
around a couple of hundred. Officials at the U.S. Embassy in Brazil said
American farmers are encouraged to register with the embassy in case of
an emergency, but many do not.

The lure is cheap land and labor--Carroll said $2 or $3 a day is
considered a good wage--and the opportunity to break into a line of work
that, for all practical purposes, is closed to newcomers in the United States.

American agricultural businesses, too, have been aggressive in investing
in Brazil. U.S.-based agribusiness giants Cargill Inc., Archer Daniels
Midland Co. and Bunge Ltd. have saturated Brazil's major soybean areas
with plants.

Biotech giant Monsanto Co. has had more problems breaking into Brazil, in
part because of a government ban on genetically modified crops. Last
fall, however, the Brazilian government dropped its opposition to biotech
crops, opening the door for Monsanto.

For every American farmer who has moved to Brazil, many more are toying
with investing there.

Phil Corzine, a part-time farmer in Assumption, Ill., is trying to drum
up $2 million from Midwestern investors for a farm venture he is planning
in Brazil.

"We actually bill this as a way for farmers to hedge themselves against
factors [in the U.S.] they can't do anything about--land costs, labor
costs," Corzine said. "If you go down there, it doesn't take a rocket
scientist to figure it out--they have a real good situation."

Hope for bargain land

If they can raise enough money, Corzine and two partners plan to buy
about 1,200 acres in southern Tocantins, a largely undeveloped state in
central Brazil where land costs $100 to $300 an acre. In central
Illinois, by contrast, an acre of farmland sells for about $4,000.

In many ways, the migration of farmers from the United States and
elsewhere to central and western Brazil replays what happened in the
American Midwest more than 100 years ago--"kind of like the development
of Illinois, in hyperdrive," Corzine said.

Brazil is benefiting from expanding global markets, new crop varieties
and government programs that encourage farm development. It has emerged
as an agricultural force to rival the United States and European Union.

And unlike the U.S. and EU, Brazil has plenty of room to grow. A 2001
report by the U.S. Department of Agriculture estimated that the potential
area for growing soybeans in the Brazilian cerrado, a scrubby savanna
that abuts the rain forest, was 220 million acres--larger than the land
area of all but 12 countries in the world.

Corzine, who designs Web pages and farms 350 acres, said he became
interested in Brazil because farming in the United States is not much fun

"My great-great-grandfather broke sod on land that I still farm, and you
hear stories that he had to wear hip boots because the rattlesnakes were
so thick," Corzine said. "And you go down to Brazil, and you are out
there in the pasture, and you think, `This is what it was like.'"

Phil Warnken is one of a handful of entrepreneurs who have tapped into
American interest in Brazilian farming. His Missouri-based company,
AgBrazil, has taken some 400 Americans on investment tours in the past
four years.

A retired agriculture economist from the University of Missouri-Columbia,
Warnken said he initially tried to woo farmers but found that most were
unwilling to take the risk. He now focuses on investors who like to put
their money into farmland.

"There's tremendous interest, but it takes an awful lot of capital to
enter agriculture there if you are going to do it on the scale the area
needs," Warnken said.

Americans who wish to farm in Brazil first get a business visa, and then,
once they have proved themselves as legitimate farmers, apply for a
resident visa, he said.

Despite the promise, Brazilian farming poses a variety of challenges for
Americans, from grinding bureaucracy and petty corruption to a paucity of
amenities such as shopping centers and first-run movies. And, of course,
very few people in rural Brazil speak English.

Ron Osman, a Marion, Ill., farmer and lawyer who bought 5,150 acres near
the town of Luis Eduardo in 1999, said some of the sales pitches offer a
sanitized view.

Bandits last year ambushed Osman and his wife, Michelle, while they were
driving near Luis Eduardo, chasing and shooting at the Osmans' pickup
before Osman finally distracted them by throwing wads of money out the window.

"You go down there, and you see these huge farms, and the weather is
nice, and you hear about the huge yields, and that's all true," Osman
said. "What you don't hear about is the transportation problems, the bad
roads, the bandits. And the deal is never done in Brazil. It doesn't
matter what you have signed and documented."

While some of the Americans, such as Carroll, are overseeing well-
financed family operations, others have moved to Brazil with little more
than hope.

Entrepreneurial spirit

Carroll's friend Adam Howell, 29, of Middletown, Ind., cobbled together
enough money in 2000 to buy about 1,200 acres. A former linebacker at
Princeton University, where he majored in economics, Howell is trying to
sell parents of college classmates on the financial merits of Brazilian

With projections of 18 percent returns on investment, Howell is hoping to
raise from $4 million to $10 million to buy and operate a large farm.

Doug Farrell did the same thing in 1973. Growing up on a dairy farm on
Maryland's eastern shore, Farrell listened to his father and uncle talk
about the potential of Brazilian agriculture. And when he graduated from
high school, he moved south.

After more than 30 years in Brazil, Farrell owns 74,000 acres in the
west-central state of Mato Grosso that only opened to soybean farming a
few years ago. Farrell bought his land for about $30 an acre in 2001,
after years of working odd jobs and being a tenant farmer. Now he farms
about 5,000 acres, although he is planning to clear as much as the
government allows.

"It's now worth about $200 an acre," said Farrell, 49. "Progress hit that
area real fast."

For every tale of success, there are many of hardship or hassle. One
April afternoon, Carroll discovered several workers idling beside a
soybean truck.

The workers, Carroll learned, had gone on strike, arguing that, given the
high price of soybeans, they deserved more money. The dispute was
resolved when Carroll suggested that if they were paid more when prices
were high, they would also be paid less when prices fell.

Carroll spent another part of the same afternoon haggling over a $300,000
cotton picker--the last one available in Brazil--at the John Deere
showroom in Luis Eduardo. While waiting for Carroll's check to arrive
from John Deere's financing agency, the dealership tried to back out of
the deal when other farmers offered $30,000 more, in cash.

Creeping bureaucracy

 "Everything is extremely slow moving," said Carroll, who estimates that
he spends half his time on the farm and half haggling with--and
occasionally bribing--government officials. "The amount of bureaucracy
here is unbelievable."

Carroll's full-time employees live on the farm in modest buildings and
eat their meals on a long picnic table under a thatched roof.

Carroll and his wife, Kelly, live in a comfortable three-bedroom house in
Luis Eduardo, about an hour from the farm. The town, in Bahia state, is
so new that many maps do not show it, but with the recent influx of farm
money, it is now bustling with stores, restaurants and farm equipment

"Fifteen years ago, it was only a gas station," Carroll said. "Now
there's 30,000 people."

Whatever money Carroll makes on the farm he plans to use to buy more
land, he said.

"A lot of U.S. farmers call me and say, 'I want to invest in Brazil, but
I don't want to move there, and I don't trust the Brazilians,'" Carroll
said. So starting next year, he is farming 7,500 more acres for some
Americans who purchased farmland nearby.

Asked whether his goal is to become the richest farmer in Bahia state,
Carroll said, "Why stop at Bahia?"

"I said I'll give it five years and see how it goes," he said.


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