As food demand soars, S. American production jumps, but with risks

A striking farmer stops a line of  trucks carrying rice for export in Gualeguaychu, Argentina, June 19, 2008. Ten trucks carrying enough rice to feed 3 million people in one day sat stranded on the side of the road- casualties of a 100-day-long farm strike that's paralyzed this country's giant grain industry.
A striking farmer stops a line of trucks carrying rice for export in Gualeguaychu, Argentina, June 19, 2008. Ten trucks carrying enough rice to feed 3 million people in one day sat stranded on the side of the road- casualties of a 100-day-long farm strike that's paralyzed this country's giant grain industry. Diego Giudice / MCT

INES INDART, Argentina — For farmers such as Boris Pisacco in Argentina's vast, fertile plains, the past five years have been boom times as prices for soybeans, wheat and other grains have skyrocketed.

Global food shortages and the resulting climb in prices have opened a window of opportunity for Pisacco and farmers all over South America, and they've made the most of it by producing more soybeans and other grains than ever.

"There's a lot of capacity in Argentina, including a lot of capacity that hasn't been met," Pisacco said. "We believe we'll be able to help feed the rest of the world."

South American countries such as Argentina and neighboring Brazil claim some of the world's best farmland as well as low population densities, giving the region perfect conditions for increasing food production, experts say.

That's inspired confidence here that South American farmers can help solve the world's food woes, and farmers are investing in new equipment and expanding the land they cultivate.

The expanding production comes at an environmental cost, however, as farms consume more and more of the available land.

In Argentina, soybeans already cover 42 million acres, about half of all the areas under cultivation in the country and a swath the size of Florida. That's a 150 percent increase over soybean acreage in 1996.

Argentina ranks third in world soybean production, behind the United States and Brazil. All but 5 percent of the soybeans produced in Argentina are sent abroad, principally to China.

Exports of soybeans, wheat and other grains also have fueled the economies of impoverished countries such as Paraguay and Bolivia. Wheat production in Bolivia, for example, jumped by 170 percent from 2001 to 2007, totaling 53 million pounds last year.

"We in Brazil export much more food than we consume, so we can be a big part of the solution," said Francisco Menezes, a former president of Brazil's National Food and Nutritional Security Council. "We're in a particular situation in this crisis."

To be sure, food prices are rising in South America as they are all around the world, and inflation has become a major worry.

Just last week, 500 people angry about rising food prices tried to invade a supermarket in the southern Brazilian city of Porto Alegre and were repelled by police firing tear gas and rubber bullets.

In Argentina, economists estimate that annual inflation hovers around 25 percent, with rising food prices among the top contributing factors. Local prices for corn have grown by 41 percent over the past year, while prices for wheat have risen by 56 percent.

Yet the trend also has brought in billions of dollars in export revenue for South American economies and driven the longest spell of sustained growth in the region's recent history.

Governments have amassed tens of billions of dollars in reserves, and unemployment and poverty rates have dropped.

"Argentina has come out on the positive end of these trends," economist Jorge Todesca said. "But in global terms, Argentina is just discovering its role. The government still sees the agricultural sector principally as a provider of food to Argentines."

The debate about whether to prioritize feeding Argentines or the rest of the world has fueled a bitter, three-month-long fight between President Cristina Fernandez de Kirchner and the country's farmers over controversial export taxes on soybeans and sunflowers.

Fernandez de Kirchner said she raised the taxes in March to better distribute record profits earned by farmers and to encourage the sector to grow more wheat, corn and other crops that Argentines consumed.

Farmers said the taxes cut unfairly into their profit margins, and they've launched roadblocks and production strikes to protest the measure.

Alfredo Pereyra, an agricultural engineer in the central Argentine town of Arrecifes, said farmers were growing more soybeans not just because of rising international prices but also because of government price and export controls on wheat and other crops consumed at home.

Adding to the problem, fertilizer prices have grown by 180 percent over the past 12 months to about $1,500 per ton, and the popular herbicide Roundup costs nearly double what it did last June, farmers said.

"Sure, prices are rising, but our costs are also growing," Pereyra said. "This commodities boom is also starting an expenses boom."

Such costs are skyrocketing all over the world, and South American farmers warn that the trend could spell the end of the farm boom.

"We've stopped increasing production, because the costs are growing much more than the prices," said farmer Leandro Mossi, who grows grains and cotton on nearly 50,000 acres in the western Brazilian state of Mato Grosso.

"We're waiting for the prices to grow even more to plant more, and that's the reality. Prices are going to grow even higher for poor countries."

Expanding food production comes with a potentially high environmental cost, as farmers clear forests to plant increasingly lucrative grains.

For example, Brazilian government data show that Mato Grosso state was responsible for 70 percent of the Amazon rainforest destruction in April. Most of Brazil's soybeans are grown in the state.

The destruction also is happening in northern Argentina, where about 740,000 acres of forest were cut down every year from 2002 to 2006, mostly to make way for grain production, according to Ulises Martinez of the Argentine environmental group Fundacion Vida Silvestre.

"For many Argentines, this is an opportunity, because we're very efficient farmers," Martinez said. "But it's also an opportunity that comes with great dangers."

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