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DAVID KRUSE

By Staff | Oct 22, 2010

Brazilians have a different way of looking at things. That doesn’t necessarily have to be bad as sometimes they see things more clearly having a larger spectrum of primary colors.

We tend to see things as black and white and they are surprised that we don’t see more shades of gray. Literally, they are surprised to hear President Obama described as the first black President when “he is mulatto.”

Brazilians have many more classifications of race than Americans do. The Brazilian broad perspective of diversity extends to most everything.

Americans want to quickly sort through the details to get to the heart of the matter. Brazilians focus more on the journey than the destination.

Brazilians’ definition of good and bad is also broad. Larry Rohter noted in his book “Brazil On The Rise,” that abortion is illegal in Brazil and the law enjoys broad support with no one looking to change it. However, it is estimated that Brazilian women have an average of two abortions.

Brazilians will collectively support doing the right things while not doing them. Brazilian business practices considered unethical in the U.S. are not considered to be so in Brazil, so they do not see themselves as unethical.

My son, Matthew, who has lived in Brazil since 2004 commented on being frustrated with ‘Carnival’ over seeing in it how well they could organize and orchestrate a party revealing their ability to manage when motivated. Brazilians seem to revel in bureaucracy designed most often to employ more people.

Examples are everywhere but here is one. My young son, Chase, and I were browsing in a toy store in Brasilia. A clerk followed us around every corner. Having chosen an item, we went to the counter to pay for it. The clerk at the cash register told us that we had to first give the item to the clerk trailing us. She left to write up a ticket that we then presented to the cashier to pay for it. We were then given a receipt we had to take to a third clerk who bagged and handed us our item.

You could not employ more people or create more paperwork in what should be such a simple process. The larger the business transaction, the more bureaucracy grows to scale. Brazil’s system of regulation and bureaucracy requires they employ more people adding significantly to overhead costs – something U.S. management finds frustrating, but it is what it is.

Brazilian regulation is leveraged and un-integrated. Monsanto has been running the regulatory gauntlet getting its GMO cotton seed approved for sale in Brazil. Monsanto is a global company used to foreign regulatory hurdles.

There is no such thing as circumventing these processes in Brazil, only stubborn forward motion will prevail.

For example, Monsanto finally won approval to sell Roundup Ready cotton for this crop season, something our farm has been looking forward to planting. It is now legal for Monsanto to sell RR cotton and for farmers to plant it this year.

It, however, is not legal to spray it with Roundup. Monsanto has not succeeded in gaining approval for Roundup herbicide to be sprayed on RR cotton which obviously defeats the purpose. Can such things be expedited or does anyone in authority really care about such regulatory impediments to doing business in Brazil?

No. Their system reigns supreme with no thought put toward deregulation. They are working harder to add more red tape while dulling the scissors.

Then how in the world is Brazil’s economic growth rate 8 percent, its economy booming with GDP production evident everywhere you look? They are starting from a significantly lower level so that 8 percent of a smaller number is statistically easier to achieve.

The average Brazilian makes a percentage of what the average American makes, but they are more optimistic, happier with their economic progress than average Americans are right now. Eight percent growth generates a noticeable improvement in standards of living.

Our company Groupo Iowa is based in Luis Eduardo Magelhaes, or LEM. When I first traveled there in 2001, it had about 15,000 people. By contrast, the business center in northwest Iowa is Spencer with a population near 11,000.

Since 2001, LEM has mushroomed from a glorified truck stop into a thriving city of 60,000 people. That’s quadrupling in size in less than a decade.

The big box stores have not reached LEM yet so it has a thriving commerce of small businesses, multiples in number to what you find in Spencer, where the population has essentially stagnated during the comparable period.

Growth also manifests itself in demographics of age. The population of LEM is typified by youth. There are reportedly 15,000 school children going to 13 private and 24 public schools in and around LEM. One can barely imagine what LEM will look like in another decade as the growth dynamics extrapolate.

Brazilians embrace capitalism. It is a particularly positive financial era for them as even the poor have participated in some degree of upward financial mobility.

Brazil provides for its people with a social safety net without it burdening economic growth something that can’t be said for the U.S. at this time.

Brazil likes the path they are on and few want to dramatically change it.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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