Gareth Morgan: Brazil's dream factory hints at NZ's future

Back on the bikes and riding northward from Brasilia we arrive at Luis Eduardo, in the heart of the industrial farming that nowadays dominates the cerrado, the savannah land that defines the heart of Brazil.

Extending from 1000km south of the Amazon down to Paraguay and almost to Sao Paulo, it is this area more than the headline-grabbing Amazonia that underpins Brazil's economic emergence.

From a country that only 30 years ago struggled to feed itself and was a net importer of food, it is hard to believe that Brazil today is one of the five agricultural superpowers, with the US, Russia, Australia and Canada.

It is here where the maize, corn, and soy that feeds the world is grown, plus coffee (under pivots), eucalypts and cotton. In Luis Eduardo where the largest global branch of John Deere is situated, the town has just boomed as the world's agricultural giants of Cargill and Bunge have moved in to process the bounty of the area.

Visually it's a bore as we ride through, thousands of hectares of dead flat country lined with crop rows. This is the second coming of the cerrado, where once stood miles and miles of pine and cashews, the original failed plantation experiments on this vast area and which in time surrendered to the regeneration of scrubland.

Nowadays the vision of dozens of combine harvesters lined up ready to roll across the plains, extracting yet another year's crop from the annual grain and soy planting, is one that materialises every year.

That the cerrado is the first tropical food source (all others are in the temperate belt) and has managed its achievement without subsidy - unlike the US for example - lies at the heart of the economic renaissance of Brazil.

The potential is huge - the Food and Agriculture Organisation estimates there's 400 million hectares of usable territory here, yet so far less than 50 million hectares of that is under crops. Water matters of course and Brazil has more reusable water than any other country, indeed more than the whole of Asia.

The soils of the cerrado were too acidic for crops but application of lime, introduction of brachiaria, an African grass, and the use of non-till cropping, wherein last year's stubble remains in the ground to add year-by-year to the organic material on the surface, have combined to conquer this constraint.

Add to this the development of a soyabean variety that can cope with the baking temperatures of the cerrado and the world's first substantial tropical agricultural powerhouse has been launched.

The potential to export the techniques the Brazilians have developed for the cerrado to the savannah of Africa, where food shortages are infamous, is massive.

But of course as always it would require a functional society, where private property is respected and public infrastructure can exist without being pilfered and plundered by marauding warlords.

A functional society that can feed itself is a prerequisite for political and social stability but which comes first - the functional society or a reliable supply of food and life's basic necessities? That has never been clearly determined.

In the midst of the juggernaut of agricultural production lies a little New Zealand dairy farm and processing factory, positioned to supply some small part of Brazil's avaricious demand for protein.

Dairy farming in the tropics seems as too far-fetched for reality as once did growing soy, but such is the opportunity that Brazil offers that nothing can be discounted as the stuff solely of dreams.

And to think there are Kiwis also exploiting the potential of dairy farming in deepest darkest Africa right now, while Fonterra pushes ahead with its farm expansion in China. It makes the whole spectre of the internationalisation of our dairy industry suddenly a very real direction for the development of this, our strongest industry - something for which we will have to pinch ourselves in 10 years to comprehend the enormity of what's occurred.

The hoary old model of export or perish, develop New Zealand farms to the point of ecologically pulverising the surroundings, pales into a mindless extreme of parochial myopia, when compared with the opportunities for our dairy industry abroad.

But of course such development requires us to be able, as foreigners, to be able to buy or at least lease farmland abroad. How ironic that this is well under way, while back in New Zealand we paralyse our intelligence by sinking into a mindless swill of xenophobia about the same happening within our own borders.

Thank goodness that such occupation by the chattering classes, and politicians that fawn to lowest-denominator populism, constrain but don't prohibit the potential of New Zealand's business, political and social thinking. Cowering to such inward-looking circumspection would cement our economy's downward slide on the OECD league tables to the point the protectionists would end up "protecting" five-eighths of very little.

The potential to exploit internationally the IP of New Zealand's achievements in the agricultural sphere are boundless, the addition to our income such initiatives could achieve conceivably mind boggling. There are of course none so blind as those who refuse to see this, instead deluding themselves with introverted protectionism.

* Gareth Morgan, director of Gareth Morgan Investments, is back on his bike again, riding north to Amazonia and around to Colombia.