By Lisandra Paraguassu
SAO PAULO (Reuters) – Chinese trader Cofco and other foreign players are interested in helping Brazil recover degraded farmland and reduce the carbon footprint of agriculture in one of the world’s largest food producers, said Carlos Augustin, special adviser to Brazil’s Agriculture Ministry.
Augustin told Reuters that Cofco expressed interest in the proposal during business meetings in late March, ahead of President Luiz Inacio Lula da Silva’s trip to China this week.
“They have every interest,” said Augustin, adding that a Cofco delegation is expected for talks in Brasilia next month. “It would be a chance to multiply grain production and guarantee supplies.”
Launching the program with a major Chinese trader would underscore the importance of Brazil-China trade in Lula’s plans to reduce emissions in Brazil’s booming farm sector. China is Brazil’s biggest trade partner and Brazil accounts for 22% of Chinese imports, driven largely by farm goods.
After talks with the Brazilians in Beijing, Cofco Chair Lyu Jun expressed optimism for the future of cooperation talks, according to an agriculture ministry statement on March 24. He did not elaborate.
Brazil already offers subsidized credit lines for farmers converting degraded pastures to more productive crop fields, which sequesters more carbon and eases pressure to clear forests for planting. But the program only represents 2% of Brazil’s subsidized farm credit, or about 6 billion reais ($1.2 billion) in the latest crop.
A new model for public-private partnerships with foreign companies is still under discussion, said Augustin, which may involve Brazil’s development bank BNDES or direct contracts with farmers. One version would have farmers guarantee sale of their production to the companies that finance land recovery, he said.
Lula’s advisers estimate Brazil has some 30 million hectares (74 million acres) of underused pastureland where crops could replace ranching. Augustin said the ministry plans to focus initially in the midwest farm belt, where the Cerrado savanna is being cleared at nearly the same pace as the Amazon rainforest.
Deforestation of the Cerrado, the world’s most species-rich savanna, rose 25% last year to 10,689 square kilometers (4,127 square miles), according to government satellite data.
“You don’t need to deforest another hectare to increase (farm) production,” Augustin said.
However, financing remains an obstacle. Agriculture Ministry studies estimate a cost of 15,000 to 23,000 reais to recover one hectare of degraded land. With an aim of recovering 2 million hectares per year, the initiative could cost up to 46 billion reais annually, more than seven times the government’s current financing program.
($1 = 4.9425 reais)
(Reporting by Lisandra Paraguassu; Writing by Ana Mano; Editing by Brad Haynes and Josie Kao)
