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DAVID KRUSE

By Staff | Sep 20, 2013

As if the President wasn’t in deep enough swimming with alligators, Edward Snowden let it out that the National Security Agency was spying directly on Brazilian President Dilma Rousseff and Mexican President Enrique Nieto’s personal communications.

I can’t imagine that either of them was all that shocked privately, but Dilma in particular was publically embarrassed about it. They both had to express some righteous indignation to their political constituencies.

What has incensed the Brazilians over NSA spying is that they believe that we are doing the same thing to them that we blast China for doing.

They see no terrorist-related U.S. security objective in reading Brazilian emails and scoff at the contrived justification.

President Obama gave Rousseff the standard line about the NSA sweeping up metadata, but he was essentially lying to her as it later got worse when it was revealed that NSA was monitoring Petrobras, Brazil’s oil company communications.

This was entirely commercial intelligence with no justification of any security purpose.

That is like the Chinese hacking Exxon-Mobil. The NSA got caught with its nose stuck into Brazilian cyberspace violating the very tenets of conduct that we demand of others. It damages our credibility.

Brazil was in no way or shape any kind of security threat to the U.S. before, but the way they are being treated, relations have been damaged. Are we going to have any friends left?

Feedstuffs Magazine led off with the headline, “Brazil on cusp of ag dominance.” That reminds me of the often-repeated joke about Brazil having a bright future “and it always will.”

In other words, Brazil is always on the cusp of success, but doesn’t quite reach it. Brazil’s greatest success is Carnival. They take a week off to party and they put more effort into Carnival planning and execution than they do anything else in that country.

They also don’t have enough elections to maintain the roads. As an election nears, the road crews appear and new asphalt is laid to promote the idea that the politicians are improving things. The day after the election, it all stops.

Brazil is hosting the World Cup and Olympics. It will not be able to pull off first-class events, but should succeed in convincing itself that it did.

They are putting more resources into soccer stadiums and facilities that they will have little use for after the events than they are roads, schools and hospitals. The people are unhappy about it.

USDA Secretary Tom Vilsack visited Brazil before the NSA news came out. Without a farm bill he claims to have no money to keep paying Brazil to compensate for the WTO award over U.S. cotton subsidies.

After the NSA revelation, Brazil will have little tolerance for not getting their monthly check from USDA.

The U.S. has a competitive advantage in infrastructure that is at risk from not modernizing our Mississippi locks and dams and Gulf port facilities.

It takes $134 per ton to ship soybeans from Iowa to Shanghai, China, compared to $213 shipped from Mato Grosso. The 37 percent higher cost of shipping from Brazil makes up for their lower land costs.

Brazil has no advantage in cost of production in the global export trade. It costs them almost as much to get soybeans shipped by truck from the interior of Brazil to the port as it does the entire cost shipping from the U.S. to China.

Soybeans are a much higher value crop concentrated per bushel compared to corn. A commodity that you can afford to ship by truck great distances is cost prohibitive for a lower value crop like corn.

They need barges and railroads. According to the Institute of Logistics, Brazil’s investment in new transportation infrastructure was just .8 percent in 2012 compared to 1.8 percent 35 years ago.

Brazil announces more transportation projects than actually get built and those under construction fall far behind schedule. I expect they have a better chance of getting the new soccer stadiums built, but I’m skeptical that they will be done on time, too.

The lack of storage and transportation reportedly results in a post-harvest loss of 10 percent of Mato Grosso corn production. They have been successful in improving yields, but have no place to store them.

In the U.S., when the Corn Belt first developed grain production, low grain prices resulted in flourishing livestock industries as farmers looked to walk grain off the farm. The same path of development of feed-grain production through livestock doesn’t appear as likely in Brazil.

My bottom line is that U.S. Corn Belt agriculture dominates and will for a long time.

Brazil does not appear able yet to overcome the obstacles that keep them caught on the cusp of unrealized ag dominance.

Brazil has a bright future … and as they say, always will.

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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