TOPICS > Economy

Brazil Seeks to Break New Ground in Global Marketplace

June 10, 2008 at 6:35 PM EST
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As Brazil expands its manufacturing and agricultural industries, it has carved a spot as the largest exporter of coffee, beef, poultry and other food products and as the world leader in ethanol production. Simon Marks continues a series of reports from Brazil.
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JUDY WOODRUFF: Now, the second in our series about Brazil’s booming economy and its rising place on the global stage. NewsHour special correspondent Simon Marks reports.

SIMON MARKS, NewsHour Special Correspondent: It is a modern Brazilian success story. At the headquarters of Embraer, 50 miles south of Sao Paulo, you can literally see a new Brazil taking wing on the world stage.

Embraer is now the world’s third-largest aviation manufacturer after Boeing and Airbus. You could be flying aboard one of the jets being built at the company’s headquarters in as little as three months’ time. The factory is working around the clock and already has sufficient back orders to know that it will be in full-tilt production for at least the next six years.

LAURO YASUNAGA, Manufacturing Engineer, Embraer: In this building, we put together different segments coming from suppliers all around the world.

SIMON MARKS: Lauro Yasunaga is a manufacturing engineer overseeing Embraer’s 12 enormous hangars where the company’s jets are bolted and riveted together.

LAURO YASUNAGA: It’s very exciting to know that the aircraft that you produce is flying all around the world with a name that’s now known around the world, also. It’s a very good thing for us.

SIMON MARKS: The good times only came to Embraer fairly recently. Opened back in 1969 as a state-run enterprise, by the early ’90s the company was on the brink of collapse. Horacio Forjaz, Embraer’s executive vice president, is a 30-year veteran here.

HORACIO FORJAZ, Executive Vice President, Embraer: Embraer faced itself in a very disadvantageous position because we lacked credibility, we lacked financial support, and we didn’t have a new product. Those years were quite difficult for Embraer.

SIMON MARKS: The turnaround began in 1994 with the company’s privatization and with the realization that there was a gap in the global market for regional jets seating between 50 and 130 passengers.

As the price of jet fuel rose, along with passenger demands for more comfort — Embraer jets have no middle seat — order books began to fill. Today, the company’s planes are flown by JetBlue, Delta, Virgin Australia, Air Canada, and airlines across Europe and Asia.

Its executives say Embraer symbolizes a new Brazil that is globally confident and prominent.

Expanding exports

Horacio Forjaz
Executive V.P., Embraer
I see a country with a very competitive industry. I see Brazilians exhibiting the levels of talent and determination which are required to survive in this highly competitive and aggressive world market.

HORACIO FORJAZ: I'm very optimistic today about Brazil and about the way we have been performing, not only internally, but also internationally.

I see a country with a very competitive industry. I see Brazilians exhibiting the levels of talent and determination which are required to survive in this highly competitive and aggressive world market.

SIMON MARKS: There's further evidence of that in the soybean fields of Brazil. It's harvest time on the Maringa farm (ph), 5,000 acres under cultivation, about two hours' drive west of the capital, Brasilia.

Brazil is now the world's largest exporter of soy. And much of the crop being gathered here is destined for China, where it will be turned into tofu, a staple of the local diet.

This farm has been in Masalina Sato's (ph) family for a quarter-century, since the land here was first tilled to help feed the Brazilian capital. Today, his attention on is on a world that stretches far beyond the immediate horizon.

FARMER (through translator): Brazilian farmers these days have to pay a lot of attention to the global market. Brazilian agriculture has been very important for the country's progress and also for the world, in terms of food production.

SIMON MARKS: Brazil's contribution to the global food chain goes beyond soy. It's now the number-one exporter of coffee, sugar, beef, orange juice, poultry and tobacco.

And that is creating opportunities for American companies in Brazil. The day we visited the farming region outside Brasilia, preparations were underway for an agricultural trade show.

A local John Deere representative told us that he can barely keep up with demand for the company's equipment here. And there's enormous interest among young farmers in imported scientific knowledge and agricultural technology.

RODRIGO VARSATO, Agriculture Engineer (through translator): We have to be up-to-date. We have to use the right technology. We cannot afford to make mistakes. We have to be precise in everything that we do today.

SIMON MARKS: Some of the biggest names in U.S. agricultural commerce are now doing business in Brazil, and some are running foul of environmentalists. They claim that the newfound hunger for crops like soy is taking place at the expense of rainforest in the Amazon.

SCOTT PAUL, Greenpeace: In reality, the Amazon Basin is the size of the continental United States. And the people that are preparing to plant soy, they don't necessarily have access or rights or even logistical capabilities to plan on the deforested areas.

You plant where you can. You plant next door to where you have your infrastructure. So what we're seeing is illegal intrusion into protected areas or into forested areas for cattle or soy or rice.

SIMON MARKS: But the Brazilian government maintains the country's abundance of land guarantees biodiversity. And in that land, young farmers see a chance for prosperity.

Agriculture's political role

Rodrigo Varsato
Brazil has been investing strongly to compete in the external market. We've got land; we have room to grow; we have available territory. We know the U.S. doesn't have that, nor does China, but we do.

RODRIGO VARSATO (through translator): Brazil has been investing strongly to compete in the external market. We've got land; we have room to grow; we have available territory. We know the U.S. doesn't have that, nor does China, but we do.

SIMON MARKS: That means agriculture is playing an increasingly large role in Brazil politically.

The revolution in Brazilian agriculture is not just helping China to feed its people and Brazilian farmers to enjoy a new degree of prosperity. It's also helping the Brazilian government exercise newfound weight on the world stage.

In Brasilia, the country's futuristic capital that was carved out of a tropical plateau in the 1950s, the government has been asserting that weight ever since President Inacio Lula da Silva came into office in 2002.

Celso Amorim is his foreign minister.

CELSO AMORIM, Foreign Minister, Brazil: Today is not only armies which make a difference. It's also ideas.

SIMON MARKS: Presiding from an office that is dominated by a tapestry based on a 16th-century view of the globe, it literally depicts the world turned on its head.

CELSO AMORIM: It's very meaningful, because President Lula has been speaking about new commercial geography of the world. Well, there you have Africa at the center. You have developing countries also at the center. The north is south, and south is north. So it's a good conversation piece and a bit symbolic.

SIMON MARKS: Symbolic of the Brazilian government's decision to confront the U.S. and Europe in the so-called Doha Round of world trade talks. Alongside other developing nations, Brazil wants a level playing field and insists that the agricultural subsidies paid to farmers in the developed world and other protectionist policies must end.

CELSO AMORIM: I think we really change the way negotiations take place in WTO. I have no illusions. It's not saying it's perfect justice. You know, we live in the real world.

But I think, if you compare what happens today with what happened five, six years ago, it's a big change. I don't see any possibility of any meaningful negotiation without the active participation of India, Brazil, South Africa, Argentina, whatever.

Ethanol from sugar cane

SIMON MARKS: A new global trade regime would permit Brazil to take full advantage of at least one product in which it's a world leader, ethanol, known here as alcool.

It's available at more than 30,000 gas stations all over Brazil, sells at roughly half the price of gasoline, and 90 percent of new cars on the roads here run entirely on it.

But unlike U.S.-made ethanol, which is derived from corn, Brazilian ethanol comes from sugar, a crop in which the country is abundant. And biofuel is now so ubiquitous here that an enormous industry exists to support the construction of ethanol distilleries.

Sao Paulo-based Dedini is the largest supplier of equipment to the industry. While U.S.-imposed tariffs of 54 cents a gallon virtually shut Brazilian ethanol out of the American market for now, the company's vice president, Jose Luis Oliverio, believes that situation will change.

The U.S., he argues, needs Brazil to help solve its dependence on increasingly expensive foreign oil.

JOSE LUIS OLIVERIO, Vice President, Dedini Industries: The United States has objective to blend 10 percent and then 20 percent of ethanol in their gasoline. This will be a huge amount of ethanol, and that will open opportunities to the ethanol imported from other countries.

And Brazil is the most competitive ethanol-producer. So if this will be open, Brazil will use this opportunity.

Regional solidarity

Rodrigo Maia
President, Democrats Party
I think Brazil should emphasize first its development and then worry about solidarity with other countries. We can help the others after we become a leading country internationally ourselves.

SIMON MARKS: There are voices in Brazil that argue the country isn't taking full advantage of its unparalleled economic opportunities. As the government here seeks a new dispensation in the economic and geopolitical realms, it speaks of brotherhood and solidarity with its global and regional partners.

That leaves Brazilian opposition leaders, like Rodrigo Maia, head of the conservative-leaning Democrats, to say the government should worry more about job number one.

RODRIGO MAIA, President, Democrats Party (through translator): I think Brazil should emphasize first its development and then worry about solidarity with other countries. We can help the others after we become a leading country internationally ourselves.

SIMON MARKS: The Brazilian government argues it's doing just that while remaining socially conscious. It points to figures showing a dramatic decline in the number of people at the lowest end of the socioeconomic scale and the creation of a vibrant middle class.

For decades, Brazilians have joked that theirs is the country of the future and always will be. Today, many of them believe that future may finally have arrived and brought with it new questions about the direction of Brazil's development and how it translates its economic muscle into geopolitical power.

JUDY WOODRUFF: Simon's next report will focus on the Brazilian music industry.