A hunger eating up the world

 China's insatiable demand for proteins as well as oil is turning Brazil into the takeaway for the workforce of the world. In the second part of our series, we reveal how the soya trade is creating a gold rush which is deforesting the Amazon 

November 2005

A smoky haze blurs the frontier between the world's mightiest forest and its biggest threat: the humble soya bean. The four-month burning season in the Amazon is when the giant trees felled to make space for crops are slowly reduced to ashes. Even after being slashed and burned, the trunks of the tauari and maçaranduba are so huge that their embers glow on and off for more than two years. Some are left to burn where they stand, creating giant pillars of charcoal stretching 30 metres into the sky.

You cannot see the wood for the beans in an ever-widening expanse of the Amazon, and it is increasingly thanks to China. Brazil's boom crop and China's growing appetite are clearing more forest than logging, cattle farming and mining. It is one of the more remarkable developments of a globalised world in which Brazil is rapidly becoming the takeaway for the workforce of the world.

Travelling from Beijing to a farm in the heart of the Amazon showed how far China's reach has extended. It took five flights and nearly three days to reach Santarem, followed by a two-hour drive.

The farmers had also come a long way and at great risk to be here. The Bonettis are from Italian stock. Just as their forebears gave up everything to move from Europe to the new world, they too quit their jobs two years ago and sold their land in the south of Brazil so that they could join the soya gold rush thousands of miles north. They now live in an Amazonian wilderness, where the father, a former computer programmer, hunts wild boar for supper while his wife keeps their child from roaming into a jungle of tarantulas and jaguars. Legally their position is tenuous, as the government has granted no approval for clearance of land in this area.

But for the pioneers it is a risk worth taking. Amazonian land is cheap. An area the size of a football pitch costs £200. But how could they be sure the soya boom would continue? "Because of China," said Mr Bonetti, whose name has been changed to protect him. "All over Asia, and especially in China, the market is expanding."

The confidence of the families who are moving to newly cleared land near Santarem reflects a giant shift that is taking place in the global food trade as Brazil becomes a leading supplier of protein for China. From space you can see why. Since 1995 satellite images show the Amazon has shrunk by 1.7m hectares (4.2m acres) a year - equivalent to a forest almost the size of Israel being turned into farmland every 12 months. During the same period China has lost more than 6m hectares of arable land to cities, factories, roads and deserts. Self-sufficient in most food and energy commodities 15 years ago, China must now import millions of kilocalories to fuel its workers just as it needs lakes of international oil to keep its production lines running. Most of the protein comes in the form of soya beans from Brazil, which are used to fatten pigs, poultry and fish that end up on the dinner tables of the world's most populous country.

Even by China's standards, the growth has been phenomenal. Since 1995, soya bean imports from Brazil have increased 10,685%. The pulses are now by far the most important item on the bilateral balance sheet, last year worth $2bn (£1.15bn), or more than a third of Brazil's sales volume to Beijing.

According to Lester Brown of the Earth Policy Institute, this could herald the formation of an axis that will dominate the world food market. For years, he said, the most important trade route for food was between the US - the world's biggest exporter of grain, soya and meat - and Japan, the main importer. But last year for the first time Brazil became the top exporter and China the top importer of soya.

Along with rising demand for the beans in Europe and a poor crop in the US, this contributed last year to the second biggest deforestation of the Amazon in history. Loggers and farmers have already cleared 600,000 hectares and tens of thousands more are added every month.

Ecological madness
Greenpeace and other critics say it is ecological madness to cut down rainforests that are home to more than 100,000 species. Soya advocates say the dangers are overblown.

"Foreign environmental activists worry too much about a few trees, a few species and a few tribes. They don't want us to develop. All we want is health and money," Jomar Nascimento Neves, an economics professor at the local university, told a recent conference sponsored by several big agricultural firms.

According to Ibama, the Brazilian state environmental agency, only 2% of the deforestation is authorised. But with only six inspectors to cover an area three times bigger than the UK, there is little they can do. "There is no such thing as sustainable management of forests. It is all predatory," said Nielson Vieira at Ibama's Santarem office. "All we can do is minimise the damage."

As in China, the losers of modernisation are local farmers, who are priced or pushed off their land. Maria dos Santos, of the smallholders union in Santarem, said 500 families had been relocated, a fifth of them by force. Benoir Jean of a French NGO, Groupe de Recherche et d'Echanges Technologiques, said people were being shot and homes burned in the drive to secure land for soya. "It has created a climate of fear in which people are afraid to talk."

In an attempt to minimise the social and environmental impact of soya, the Nature Conservancy, a US-based NGO, has joined with local officials, producers and traders such as US agribusiness Cargill to establish a system that endorses plantations which follow best environmental practices.

However, Wang Huijun, deputy director of China's department for American and Caribbean Affairs, said: "Since 2003 China has pursued a policy of sustainable development. But how Brazil protects its environment is up to them."

All over Amazonia, China's footprint is getting bigger. Near the northern port of Belemon, an alumina plant is being built to process raw materials for China's producers. Inland, Chinese merchants are negotiating timber deals in Manaus. To the east, forests are being chopped down to provide the charcoal needed for pig-iron exports. The world's biggest iron ore producer, Companhia Vale do Rio Doce, has signed a $1.5bn deal with Baosteel of Shanghai to build a mill with a capacity of 8m tonnes of steel sheet a year. Brazil's state oil firm Petrobras is building a pipeline with a $1bn investment from China's Sinopec. The government also wants Beijing to upgrade its transport system to speed raw materials from the interior to ports.

"We are looking at a possible Chinese investment in the north-south railway. This passes through an area that has great potential for soya exploitation," said Luciano Desira, commercial counsellor of the Brazilian embassy, which is about to almost double the number of diplomats it stations in Beijing.

The two countries are discussing what could be an even more significant deal - the transfer of biofuel technology, which uses sugarcane, soya and other crops to produce petrol substitutes such as ethanol. Brazil is the world leader in this field, which is increasingly attractive to China as crude prices surge.

Exports growing
Largely thanks to soya, South American exports to China have grown 570% since 1999. In the process China has overtaken Argentina, Japan and Britain to become the second most important destination, after the US, for Brazilian goods.

With economic clout has come political influence. Brazil's left-leaning president, Luiz Inacio Lula da Silva, has courted Beijing to offset US influence. Last year he headed a 450-member trade mission to China, where he said the two countries could form a relationship unhindered by colonial animosities. "We are two giants without historical, political or economic divergences, free to think only about the future."

The story is the same throughout Latin America. Argentina has benefited from a 122% surge in trade. Peru has received cash for its energy and food sectors. Chile, the world's biggest copper producer, reports that China overtook the US last year as the main copper buyer. Most contentious has been Beijing's courtship of Venezuela, which has the biggest oil reserves outside the Middle East. Castigated by the US as "authoritarian", President Hugo Chavez has been more than willing to accept the embrace. Last year he signed a deal that is expected to double bilateral trade in 2005 thanks largely to energy exports. The first tanker of Venezuelan oil arrived in China this summer.

Such developments have not gone unnoticed in Washington. "I believe we should be cautious and view the rise of Chinese power as something to be counterbalanced, contained and perhaps go so far as to consider China's actions in Latin America as the movement of a hegemonic power into our hemisphere," Dan Burton, the Republican representative for Indiana, told a house foreign relations subcommittee.

The soya barons are so convinced that demand will continue to grow that they are planning to clear millions more hectares. "We don't trust China as a partner," said Pio Stefanello, a plantation owner and Brazil's leading distributor of soya seeds. "But it is a huge contributor to growth. They are big consumers for everything."