- The Washington Times - Monday, January 5, 2004

JULIO DE CASTILHOS, Brazil — They are counting on another bumper soy crop in southern Brazil, where a new breed of rebel farmers works the fields in air-conditioned tractors and runs to town in big new pickups.

The seeds being sown — and making the farmers rich — are genetically modified to provide healthier yields at lower costs than conventional soy. They originally were smuggled in during a long-standing legal ban on so-called transgenic seed.

While Brazil’s ban didn’t stop many farmers, it made it impossible for Monsanto Co. to collect seed revenues or crop royalties, as it does from farmers in the United States and elsewhere.

American farmers are livid, but growers in towns such as Julio de Castilhos are beaming.

“Every year it’s just getting better,” said Rodrigo Martins. Now 24, he started farming soy at age 17 and gave up plans to go to law school because he was making so much money. “With [genetically modified] soy, you produce lots more profits in six months instead of a year, and it’s not as much work.”

In response to soaring world demand for soy used in products ranging from animal feed to processed food, Brazil’s production has skyrocketed. It is expected to surpass the United States next year as the world’s top soy exporter.

An estimated 10 percent to 20 percent of Brazil’s soy crop is grown with seeds smuggled in from neighboring countries and replicated locally. In Rio Grande do Sul, Brazil’s third largest soy-growing state, transgenic seeds are used to produce up to 90 percent of the annual harvest, analysts say.

U.S. Sen. Charles E. Grassley, Iowa Republican, accuses the Brazilian government, which rarely enforced the ban on transgenic soy, of letting the situation get out of control.

Brazil’s soy farmers are getting what amounts to an indirect subsidy, he contends, and are robbing Monsanto of money to develop new seeds that would help American farmers become more competitive.

“It’s unfair competition,” Mr. Grassley said.

Brazilian farmers acknowledge using illegal seed, but say their actions are forcing the government to legalize transgenic soy. Brazil permitted the planting of transgenic soy for the first time this season, and a bill is wending through Congress that would create the country’s first rules allowing biotechnology in agriculture.

Critics are worried about long-term environmental effects. Brazil’s ban was in line with that of most European countries, which do not permit genetically engineered crops.

Smuggled transgenic seeds were introduced in Julio de Castilhos by a Uruguayan trucker in 1996, and skeptical farmers were amazed at the results. Oli Amadeu Facco planted five acres with the seeds, and they produced 50 percent more than his land cultivated with conventional seeds.

“I couldn’t believe it, but it came out more green, just beautiful,” said Mr. Facco, a burly 35-year-old who also travels from farm to farm as an agriculture specialist for the local soy farmers cooperative.

In an area where cattle long was king, there now are more than 100,000 soy growers in Rio Grande do Sul state, a land of gentle rolling hills and flat “pampas” larger than Kansas and Iowa combined.

Soy production in the Julio de Castilhos area has doubled to nearly 250,000 acres. Cattle farmers reduced herds and hired legions of workers to clear rocks from pastures so they could be planted.

Shifting from beef cattle ranches was a no-brainer. A farm of about 2,500 acres in the town producing genetically modified soy generates about $155,000 in yearly profit, compared with $45,000 for cattle.

The new money is coursing throughout Julio de Castilhos, population 25,000. Farmers and farmworkers used to bake under the relentless sun in open-air tractors, but virtually everyone is buying air-conditioned tractors from local dealers these days.

Land prices have tripled in five years, as have sales of $155,000 combines. Once-vacant storefronts are filled with new businesses ranging from cell-phone vendors to a natural food shop.

Many residents are the descendants of poor German or Italian immigrants. Some farmers and business owners are having family trees prepared and contemplating trips to Europe for the first time to see the old country.

But most are plowing their profits back into their farms, aiming to increase productivity amid growing competition.

As he supervised farmworkers loading seeds into a planter that efficiently injects them into the soil without plowing furrows, Mr. Martins said he doesn’t regret his decision to forsake law school for soy farming on his family’s land.

With soy profits, the family has invested $344,000 to buy better farm equipment and build a dormitory for farmworkers.

They also put in a few ponds to raise carp, which the family sells to locals seeking a change from their daily “churrasco,” or barbecue in Portuguese.

“We can’t give this up, so my younger brother will go to law school, and we’ll still have a lawyer in the family,” Mr. Martins said.

Mr. Martins and other Brazilian soy producers brush off criticism from American farmers, saying the latter benefit from generous U.S. crop subsidies.

Julio de Castilhos’ soy farmers also insist that they want to pay Monsanto as soon as they can buy the company’s seeds, and they support the bill in Brazil’s Congress that would allow the government to legalize transgenic-seed sales.

Monsanto declines comment on how much money it has lost or how much it could make in Brazil; the company also won’t say how much it would charge.

Lucio Mocsanyi, spokesman of Monsanto’s Brazilian division, said the company sets prices at a level that does not discourage farmers from planting. In other countries, Monsanto’s fees never surpass 5 percent of the price the farmers get for their soy, he said.

“We want to reach agreements that are good and fair for both sides,” Mr. Mocsanyi said. “Growers are our customers.”

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