Alex Melchiore

September 8th, 2016

Dr. Tait Chireje
Brazil: The Troubled Rise of a Global Power
Chapter 10: Oil, Farming, and the Amazon
Brazil has made a huge step forward in the energy business, especially in recent years. In
2012, construction was well underway for a brand new oil port that was going to become the new
center of the industrial complex. Once complete, this port would be able to a fuel a power plant
that would supply electricity to over 20 million citizens, two hug steelworks, car plants and other
factories, Brazils largest shipyard, and most notably a new town that would be home to over
250,000 citizens. All of this was part of the master plan to propel Brazil forward in the energy
industry. Eike Batista was the central leader of this project and was very confident in it to make
him and the rest of Brazil a lot of money. Eike was already an eccentric billionaire and seventh
richest man in the world. His vast wealth and confidence was able to bring in many outside
investors, banks, and much capital from the financial markets. Unfortunately, this new
confidence in him began to digress. Several of his companies began to falter and constantly
missing production deadlines. For example, the iron ore he owned was sold to Anglo American
for $4.8 billion but a vast amount of technical problems caused the developments costs to triple
and his deadline was missed by many years (Reid 192-194).
Oil drilling was only recently successful in Brazil. Many expeditions to find oil on land
did not turn up much success. This prompted Petrobas (at the time was one of the most trusted
names in oil) to start drilling offshore, and for them it was like striking a gold-mine. Petrobas
was highly successful and continued to improve and succeed with little political interference. Oil
output from these drillings was hugely successful; so much so that between 1996 and 2005 the
output more than doubled, and proven reserves of oil doubled as well in 2002. The 2007
expeditions turned up overwhelmingly huge finds in oil and Petrobas continued to rake in the
profits. With all of this newfound success, Dilma Rousseff (who was a staff chair on Petrobas
board at the time) did everything in her power to guarantee that the state would tightly control
the new found bounty. She decreed that the oil would be the spilt between Petrobas and a new
state company: Pre Sal Petroleo SA (PPSA). The state also decreed that the much of the
equipment used would be made in state as well. They tried everything in their power to keep
everything within Brazil. This oil was vast but hardly easy to get to. The oil itself lied 2
kilometers beneath the oceans surface; the technology was not the problem but the whole
process was geared towards keeping the geologic formations from breaking apart and collapsing.
This required the oil to be ferried over to the mainland through the use of many tankers rather
than pipelined to ensure safety to the structures. This process had created over 70,000 jobs by
2013 and kept Brazil the main beneficiaries of the oil harvested. Another issue that arose was
that the rate of inflation had a severe impact on the production and export costs. Petrobas had to
cut many operational costs if the exports were to remain profitable. Dilmas faults in economics
held down the price of oil and they would be forced to import petrol which had no choice but to

sell it for a loss. Once oil started to drop, Brazil turned to another alternative fuel source: ethanol.
Ethanol derives from sugar, one of Brazils top exports and is highly controversial because some
of the other biofuels can take food out of the hands of citizens for fuel. This was different
however because the sugar-based ethanol was environmentally friendly and relatively cheap. The
state really gave birth to this market and has made Brazil a key player in the ethanol export
chain. Many automobiles in Brazil rely on this more environmentally friendly source of fuel
which was gaining more and more ground after oil prices started to rise. Within a few years
Brazil could become the worlds largest ethanol exporter (Reid 195-199).
Another proprietary occupation in Brazil is agriculture. It is a huge player in agriculture
and will only continue to rise. It is ranked third behind the US and EU in farm exports and is the
leader in exports of coffee, sugar, orange juice, maze, and soya beans. This was not always the
case for Brazil however, up until the 1970s Brazil was a major food importer due to the military
dictatorship which controlled all exports and prices essentially selling them for a price that only
made the dictatorship money. Brazils geography is responsible for much of its success, with the
abundance of sunlight and huge amount of rainfall, most farms were able to draw three harvests
per year. Brazils green revolution in the start of 1973 was really taken on by the farmers who
were already innovating sustainable practices such as no-till farming. This technique required a
new planting machine to help aid in these practices which is now manufactured in Brazil. As the
production of many crops began to rise (soybeans had taken over as Brazils number one
agricultural export), they began adopting genetically modified crops to produce even more and
export more. Agriculture had a few different issues associated with its practices socially and
environmentally. Land ownership was highly skewed towards the upper echelon of the social
class. A little over 1.1 percent of farms own about 45 percent of the land (which many believe to
be illegally owned). From this a new social group arose in an attempt to expose the corruption
and fight for social justice: the MST. Due to their activism, Cardoso had launched the biggest
land reform program in the history of the country with varying results (Reid 200-205).
Speaking of social justice, the native people of Brazil began to fight for their own
freedoms on their own lands which the government agreed to leave be and not develop. Colonel
Candido Mariano da Silve Rodon was a main protector and became the first director of the
Indian Protection Service which looked to support the freedoms of the indigenous people while
on the same token try to open up the land for non-invasive development which was more than
what most countries did for their indigenous people. These plans would actually protect the
rainforests from huge development for a little while longer (Reid 206-208).
Despite the protection for the rainforests, a new effective challenger would arise to
invade the rainforests: bulldozers and chainsaws. Thanks to these innovations, lumber companies
could mow down acres upon acres of rainforests a year for timber harvesting. The untouched
areas of the Amazon would now become barren due to logging and harvesting since the lumber
there would prove to be many times more valuable because of the first generation growths and
stronger lumber. This was very controversial because many of the harvests would benefit many
around the world through the harvests and the job market. Many have argued that this land needs
to be protected but at the cost of economic growth. Arguments are still waged to this day in an

attempt to stop the destruction of the Amazon even though many environmentalists agree that
recovery is possible (Reid 209-213).
This chapter showed that Brazil has become highly innovative within the last few years
when it comes to striking oil, spurring ethanol growth as an alternative fuel source, and major
agriculture advancements. However, this chapter has shown that Brazil has a lot to improve on
when it comes to the treatment of its indigenous people and its rainforests. These have been
major issues for Brazil for a long time and have only made minor advancements. Sure the
government has land protected on paper but lacks the enforcement to ensure that it is protected.
Hopefully the future brings good fortune for the Amazon rainforests within Brazil.