If you ask a Brazilian farmer about his future, you'll inevitably hear the phrase — Brasil cresce de noite — “Brazil grows at night.” It's true, literally and figuratively. It means that regardless of what the government does that undermines their effort, the Brazilian people will succeed by working when everyone else sleeps.
But in that context, you'll hear something else — custo Brasil — “the extra cost of doing business in Brazil.” This covers corruption, government inefficiency, excessive taxation, legal and bureaucratic complications, and a sub-standard infrastructure.
Inherent in custo Brasil — and part of a larger problem — is the practice of jeitinho. Loosely translated as “doing favors,” it's how you find a way around mountains of rules and regulations. They say the trick to mastering the art of jeitinho, something most North Americans find to be a ghastly practice, is to give with grace and accept with dignity.
Jeitinho of course leads to caixa 2 — or “cash account number two.” This concept of keeping a portion of their money and assets off the books and well out of sight is normal business practice for Brazilians.
Only after you've gained this bit of insight into how most business is conducted can you begin to speculate how Brazil's vast natural resources can be put into beef production.
Yes, Brazil has millions of square miles open to agricultural development. But they aren't all what you would call hospitable. The interior savannah — which is being pushed as the world's last great agricultural frontier — is hot, humid and remote. Compared with Argentina's agriculturally rich Pampas region, Brazil's central and northeastern cerrado is prone to drought. Plus, soils can be poor and native forages tend to be very low in nutrition. And, did I say remote?
Depending on how you look at it, farmland can be fairly affordable, while foreigners can own land and invest in food production. But development costs can get out of hand, and you need to learn the ropes — the custo Brasil — or you can get into trouble.
In “undeveloped” regions, land title can be tangled by squatters. The government will graciously allow you to buy them out — and/or put them to work. Beyond what we perceive as excessively low wage rates, though, there are broad hints of agricultural “enlistment” and whispers that forced slavery still exists in some tropical regions.
In many ways, Brazil's interior is like the 19th century American West with a few 21st century cities like Dallas, Denver and Wichita plunked into the middle. There are vast contrasts between urban maturity and rural frontier. The country's cities are bursting at the seams and fraught with their own brand of social and economic disparities.
This is driving government policy to keep people from moving into the cities. But in a nation with shallow pockets, it's a stretch to believe the government will do much to directly help agriculture. In Brazil, crop production is financed, indirectly if not directly, by a few multi-national corporations. So far, they've pretty much stayed out of the beef business.
Especially in undeveloped areas, beef production is hamstrung by a climate that limits application of today's livestock genetics. This, of course, drives the type of cattle raised and the characteristics of the meat produced. Even if they could export it, fresh Brazilian beef won't end up on the table of Outback Steakhouses or in Costco's meatcase.
On the other hand, if you eat canned beef of any kind there's a good chance you're eating Brazilian beef. They have the business of producing “industrialized” beef down pat.
Brazilian beef farmers complain about government intrusion, the packing industry and even the housewives who just don't know how to prepare a good churrasco (barbecue) anymore. Hear an echo?
They also gripe about federal regulations designed to protect soils, water and native animals and vegetation. Farmers claim they could compete with the rest of the world if they received similar government treatment and comparable subsidies — akin to asking for “a level playing field.”
These days, though, the tune of Brazil's agribusiness culture is changing. This change is reflected in the attitudes and policies of charismatic and powerful bureau-politicos like agriculture minister João Vinicis Pratini de Moraes. He's working day and night to boost Brazil's world status through agriculture and exports.
Make no mistake, Brazil is good at producing and exporting “commodity” beef, and it could get better at it. It's not the most efficient country at producing beef, and there's no reason to think Brazil is going to put American cattle producers out of business today or anytime soon. But I would certainly not want to let the Brazilians, or anyone else, catch the U.S. beef industry napping.