Posted on Wed, Dec. 08, 2004 DOLORES, Uruguay - A soybean boom is sweepingSouth America like a gold rush. Farmers with soy fever are plowing bymoonlight, speculating in jungles and dreaming of digging new canals tocarry their soybeans from the continent's vast and fertile interior toAtlantic and Pacific ports.

The boom, fueled largely by China's growing appetite, is transformingglobal agriculture, largely at America's expense, and hastening the demiseof the hemisphere's last virgin savannahs and tropical rainforests.

Argentina's farmers planted about 17 million acres of soybeans in 1997.Today, they plant more than 34 million. Brazilians planted 32 millionacres in 1997. Now they plant 57 million.

In 1982, U.S. farmers produced 80 percent of the world's soybeans. Todaythey produce 37 percent. U.S. production on about 72 million acres isdwarfed by the 91 million acres of soybeans now under cultivation inBrazil and Argentina.

The U.S. share of world markets is certain to decline further becauseAmerican farmers have virtually no more acreage to plant. South America'shave millions of acres, and they're clearing them as fast as they can burnthem. Latin leaders, with some exceptions, are turning blind eyes to thedevastation.

South America's soy surge has already driven down global prices and hitU.S. taxpayers in the wallet. The target price for soy under U.S. federalfarm price support programs is $5.80 per bushel of soybeans, and thegovernment compensates farmers when prices are lower. Because soybeanshave fallen below that price, this year U.S. soy farmers will receive anestimated $1.6 billion in subsidized income support. That could rise to$2.5 billion or more next year if expected record South American cropsdrive prices still lower.

Over time, say experts, U.S. farmers will be forced out of the soy market."No question about it," said Chris Hurt, an agricultural economist atPurdue University in West Lafayette, Ind.

Historically, Latin booms have gone bust, from rubber tapping to organicguano to eucalyptus farming. But the soy boom appears to be built aroundreal and durable demand: As standards of living have increased across muchof the globe, so has the demand for meat products, cooking oils andsauces.

Enter the soybean, low in cost, rich in protein, an ideal additive tomanufactured foods and the perfect protein supplement in animal feed tofatten swine, poultry and cattle.

"We have seen global demand for soybeans grow between from 1990 and 2004by 101 percent," said John Baize, an international adviser to the AmericanSoybean Association. "We've seen rising incomes around the world, andpeople want more meat and vegetable oil in their diets."

He predicted that the 186 million tons of soy products produced in2003-2004 will soar to 300 million tons by 2020.

U.S. agribusiness giants such as Cargill, Bunge, Monsanto and ArcherDaniels Midland are entrenched in the South America trade, both buying andselling soybeans.

"Clearly there is a lot of expansion taking place in South America becauseit is a logical place. There is a lot of room for expansion," said StewartLindsay, the spokesman for White Plains, N.Y.-based Bunge, South America'slargest soybean buyer. "We are confident that supply and demand willremain" strong.

Transformed by the booming trade are unlikely places such as tiny Uruguay,where soybeans, dubbed green gold, offer relief for farmers who've beensunk in poverty for years.

"Four years ago, I had monstrous debts. In two years of soy, I havemanaged to get out from under it," said Jose Luis Gomez, a farmer inDolores.

Gomez and his neighbors, who're among Uruguay's moonlight planters, facenew competitors, however. Argentine and Brazilian soy speculators arebuying up cheap $40-an-acre farmland in western Uruguay.

In Brazil's Amazon basin, armed soy speculators are seizing rainforestland illegally and clearing it for soybeans. Brazilian growers also areeyeing Bolivia's eastern Amazon region, promoting a dam, canal anddredging project that would make more than 2,600 miles of inland riversnavigable by barges. The dream is to deliver soybeans to Atlantic andPacific ports from fertile interior areas.

Pacific ports are key for soybeans because China is now the big buyer. Itimported 21.4 million metric tons of soybeans last year, about a third ofthe global total. China's soy imports are projected to surge in theworld's most populous nation; its economy is growing at 7 percent to 9percent a year.

Paulo Pimenta, a congressman from Brazil's soy-growing southernmost stateof Rio Grande do Sul, sees dizzying possibilities.

For example, while U.S. soy oil consumption is about 6 gallons per capita,China's is only about 3.2 quarts (3 liters).

"China, if it goes to 6 liters, would absorb all of Brazil's soybeanproduction," Pimenta said. "I don't have any doubt this market willcontinue to grow."

China also has eyes on South American farmland. During a state visit toBrazil on Nov. 14, President Hu Jintao indicated that China aims topurchase some 1.2 million acres in Brazil - an area equal to about thatmany football fields - to grow soybeans to sell to itself.

By 2020, five South American countries - Brazil, Argentina, Bolivia,Uruguay and Paraguay - are expected to grow most of the world's soybeans.In each, the boom already is upending traditions and threateningecosystems.

In Uruguay, a picturesque nation of 3.4 million known as the Switzerlandof South America, a tidal wave of soybeans is making the country's cattleranches and sunflower farms disappear. Uruguayan farmers planted 20,000acres of soybeans in 2000, according to farmers and export groups. Thisseason, they're expected to plant 860,000 or more.

"We never imagined this was possible," said German Bremermann, an adviserto Erro, Uruguay's largest soybean exporter.

The hitch: Nearly half the increase will come from Argentines who boughtor rented Uruguayan farmland using proceeds from their own soy boom.

Argentina's surge began with the conversion to soy of cattle ranches andgrain farms in the flat, humid Pampas regions south and west of thecapital of Buenos Aires. The new growth is in Argentina's northern states,which are part of a vast three-country ecosystem of semi-arid bushsavannahs called the Chaco.

The World Wildlife Fund, in a report earlier this year titled "Managingthe Soy Boom," warned that 15.5 million acres of Argentine Chaco, morethan 24,000 square miles, could disappear over the next 15 years. Steeplosses are also projected in the Bolivian and Paraguayan Chaco.

The reason, according to the WWF: "Unlike forests, savannahs can beconverted directly to soy plantations." The politically moderateenvironmental group wants South American governments to do a better jobenforcing environmental laws. Chief among them are laws requiringcontrolled burnings that leave 20 to 30 percent of native forest standingwhen land is cleared. The group also favors integrated soy farming andcattle ranching operations.

Evidence of the environmental threat was on display in the northernArgentine province of Salta in late November, when a massive burning ofsavannah outside the town of Saravia lit the night sky for 20 miles ormore.

The fire approached what until June had been 57,000 acres of protectednature reserve. Provincial authorities lifted the protected status andsold the land to soy-minded farmers. Authorities defended the sale aslegal, but it was done with remarkable speed and without public input.

"You've heard of the state being absent. Well, that's a lie," warnedEmiliano Ezcurra, who heads Greenpeace Argentina's anti-deforestationefforts. "The state is present in Bolivia, in Paraguay, in Argentina andin Brazil. It has taken a side and it is on the side of uncontrolledexpansion of agriculture."

Salta's environmental secretary, Gustavo Lopez Asensio, initially toldKnight Ridder that he was unaware of the land-clearing fire.

A day later, he e-mailed to say that his inspectors had "detected" theblaze and would investigate. After another day, he confirmed that arancher had sought to clear 6,400 acres and had been authorized to lognearly 2,000 acres. In the rush to plant soybeans, he said, the farmer hadburned more than two-thirds of the authorized land without doing anylogging. Lopez Asensio ordered a halt to clearing on the still-smolderingland. An appeal is expected.

Francisco Fortuny, a large soybean grower in Salta, said environmentalarguments ignore the jobs created when land is cleared for soybeans, thejobs created in the fertilizer sector and the number of truckers employedto haul soybeans grows.

"They don't take into account the most important thing: the people wholive in a tremendous state of poverty," he said.

The lack of rural land control is particularly problematic in Brazil'svast eastern Amazon rainforest. There, speculators who routinely seizeland illegally expect a land boom if a consortium of multinationalcompanies and trading companies, including Minneapolis-based Cargill,paves a road through the jungle to Cargill's new soy terminal at theAmazon port of Santarem.

About an hour from Cargill's imposing terminal, longtime resident FredsonCosme Chagas and four friends last year cleared nine small plots of landto grow rice. While they awaited a deed from the government land-titlingagency Incra, a man in a new pickup truck showed them a document that hesaid proved he'd bought the land from Incra.

"I knew Incra doesn't sell land," said Chagas. "He thought we were stupid.He just showed us this little piece of paper."

The largely impenetrable land in question lies 20 miles from the roadCargill hopes to pave to support the soybean boom. No matter. Someonerazed the settlers' huts in January and destroyed their crops. Soy waitsfor no man.

On Tuesday, Brazilian federal police arrested Incra's regional boss, JoseRoberto Faro, on charges that he'd taken more than $100,000 from soyfarmers in exchange for land titles in the state of Para.

Police made additional arrests in a crackdown called Operation Far West inthe cities of Belem and Santarem, where Cargill has its terminal, and inManaus, the capital of Brazil's largest and most environmentally diversestate, Amazonas. Prosecutors said those arrested had provided landownership documents to soybean growers from southern Brazil who wereexpanding into the Amazon.

In Bolivia, South America's poorest country, roughly 500,000 acres ofsavannah and dry forests disappeared annually between 1993 and 2000,according to World Wildlife's report. Most of the soybeans are grown nearSanta Cruz in southern Bolivia, the capital of the state with the samename.

The state is so wealthy from farming and cattle that residents want tosecede. You can see and smell the price of prosperity in the smoke fromrampant land clearing fires.

The Bolivian Environment and Development Forum, an environmental group, ismore worried about the future of the country's Amazon region, whichborders the Brazilian state of Rondonia.

There, engineers hope to build two large dams to provide hydroelectricpower to the remote region, raise water levels and transform more than2,600 miles of floodplains into inland waterways.

Under the plan, which requires approval from federal and state governmentson each side of the border, barges could transport soybeans fromlandlocked Bolivia to Brazilian terminals for export, and Brazilianproducers would have increased access to Pacific ports via Peru.

"We feel like a state of Brazil, not so much Brazil, but the companiesthat operate in certain states and are tied to the powers there,"complained Patricia Molina, a coordinator for the Bolivian environmentalgroup.

Brazilian backers of the massive project, she said, "say openly thatthanks to this, Bolivia can cultivate soybeans throughout the entireregion" of the Amazon.

All the agrarian progress raises a question: Could overproduction kill theboom?

"You worry about the price dropping," said Ivander Secci as he plantedsoybeans in Carazinho, a farm town in Brazil's southernmost state of RioGrande do Sul. "If you look now, they are planting (soybeans) everywhere."

A combination of oversupply; bird flu in Asia, which drove down demand forsoy meal; and growing competition from palm oil and rapeseed oil alsocould send soy prices tumbling.

If that happens, said Baize, the adviser to American soybean growers,"something like 40 million tons of soybeans is going to be looking for amarket, and all of it isn't going to have a home." Disposing of thesurplus, he added, would be "likely to take prices down to very lowlevels."

Chris Van Dam, an environmental sociologist at the University of Salta,worries about something that's already happening.

Efficient soybean growing, he said, leaves out small farmers because itrequires lots of land. Soybeans also yield little gain for local economiesbecause they're mostly exported. Most of the profits end up in the handsof relatively few speculators, growers, farm equipment suppliers,exporters and shipping companies, many of them foreign.

Like past Latin booms, which exploited natural resources to feed marketsfor minerals and rubber, among other commodities, soy leaves littlebehind, said Van Dam.

"The lesson," he said, "is that we have not learned that lesson."