Till the Cows Come Home

Marabá, the traditional hub for logging and gold-mining activities, also serves as the capital of cattle ranching in the Brazilian state of Pará. Located in southern Pará at the intersection of a trunk road of the Belém-Brasília with the Trans-Amazon highways, Marabá is also intersected by both the train that runs from the mineral-rich Carajás hills to the port of São Luís and the Tocantins River, which is navigable all the way to Belém.

As the cattle-ranching industry matured first around Marabá, many of the early conclusions about its impact were drawn from nearby areas. During our first series of visits in the early 1980s, we had traveled uncomfortably by bus from Marabá to Belém for more than 18 hours. We wrote, "We gazed out the window at evidence for dire predictions of what would happen to the entire Amazon if it were cleared. The stampede into the jungle here had begun only two decades before with the completion of the Belém-Brasília Highway. Rapidly trees had been cut and burned to make way for pasture. Crops of grass sown in their place had grown sparser each year until they quit growing altogether. Thin cows wandered miles between meals. The desert of failed ranches went on for an hour—gray sky, gray dirt. It was 50 miles of moonscape."

The lunacy of the activity became even clearer as we traveled from ranch to ranch and found out that no one was making money. People had perfected methods of deforestation but were clueless about how to raise cattle profitably.

In the 1970s and 1980s, the government offered generous subsidies throughout Amazonia for agriculture, primarily cattle ranching. The military government's motivation was geopolitical, not economic. Typically the land grants and financial support went to well-heeled individuals or large corporations cozy with the government.

The cattle industry has been under attack since the environmental movement first focused on the Amazon. The furor over this subsidized destruction intensified in the 1980s when a sensational, but inaccurate, rumor spread that the "hamburger connection" was the primary culprit of Amazon deforestation. People in the Amazon, the theory went, were landless so that Americans could eat the cows that displaced them. None of this was true (at the time the United States wasn't importing Brazilian beef), but it did make good press.

The strategy of the environmental movement could be relatively simple: cut off government subsidies, and cattle ranching would cease. The forest would be safe. Part of the plan was implemented, as the government curbed subsidies by the early 1990s. Yet, from 1990 to 2005, the cattle population in the Amazon increased from 26.2 million head to 65 million. At the same time, the total amount of deforested land in the Amazon increased from about 160,000 square miles to 240,000 square miles. With a 5.5-to-1 ratio of clearing for cattle over clearing for farming, the cows were the culprit.

Somewhere along the way, a significant assumption underlying the stop-subsidies-and-you-will-stop-cattle argument changed. Cattle ranching be-came profitable. A breakthrough study conducted by Sergio Margulis of the World Bank in late 2003 highlighted this change in economics: "[Beef] cattle ranching in Eastern Amazonia or on the consolidated frontier is highly profitable from the private perspective and it produces rates of economic return higher than those obtained from the same activity in the country's traditional cattle-ranching areas [in the south]. In addition to the availability of cheap land, these returns are the result of surprisingly favorable production conditions—mainly rainfall, temperature, air humidity, and types of available pasture. The direct return on cattle ranching itself (excluding profits from the sale of timber) consistently exceeds 10 percent." The business is even more impressive when you consider that ranching land is an appreciating asset. The land's appreciation provides a private alternative to government support, as banks, viewing the land as adequate collateral, willingly loan capital to support cattle ranching. Now the operation and the asset underlying it both make money.

We traveled to the fairgrounds on the outskirts of Marabá to interview James "Jimmy" de Senna Simpson, the Pará treasurer of the Rural Producers' Union, and Diogo Naves Sobrinho, the Pará president of the cattle association. Tired of being vilified in the world press, attacked by Greenpeace, and besieged by the landless movement trying to occupy their lands, neither welcomed us warmly.

"I obey the law. I make money," said Simpson of his cattle business.

There was no reason to doubt either statement. But they spell doom for the trees of the Amazon, unless a way can be found to reconcile the rights of these law-abiding citizens, participating in a free-market economy, with the perceived environmental needs of a larger group in the region as well as those far removed from the site. To the extent Amazon deforestation affects global warming, these lawful activities are the culprits. But under what theory do you punish someone for obeying the law?

Simpson, whose family emigrated from Scotland in 1948 to work on cattle ranches in the south, arrived in Pará in 1992. About 50 and balding, dressed in a polo shirt and neatly pressed jeans, he sat behind a clean desk in an air-conditioned office in the empty fairgrounds, speaking with confidence in his cause. "Amazonia isn't what they say it is outside of Brazil. It's not full of criminals or being destroyed. It's growing and developing. It's the last agricultural frontier whether that's what the world wants or not."

There is a seemingly endless supply of land in the Amazon and a seemingly endless demand for meat in the world. Between 1997 and 2003, the volume of beef exports from Brazil increased from about 232,000 to about 1.2 million metric tons. The increased supply has lead to a steadying of, even reduction in, beef prices in Brazil and the export market, making this source of protein more affordable. Additionally these exports have provided approximately $1.5 billion of sorely needed foreign-exchange earnings for the country. Simpson reminded us that Brazil had become the largest exporter of beef in the world. "And this is why the United States doesn't want the Amazon to develop: competition."

Such arguments once were the defensive posturing of rapacious ranchers in the Amazon. Most observers thought that the problem would eventually evaporate: Brazil would tire of propping up an industry that was not only unprofitable but also internationally unpopular. The ranchers would return to their homes in the south. But the ranchers who stayed, through years of trial and error with different types of pasture grass and with different cattle breeds, now present a more perplexing dilemma. When economic activity, dependent on the environment, becomes profitable, the issues are joined. In the 1970s, no one other than the generals could justify the massive deforestation caused by ranching. Today, the free market justifies it.

Excerpted from The Last Forest: The Amazon in the Age of Globalization by Mark London and Brian Kelly. Copyright © 2007 by the authors and reprinted by arrangement with The Random House Publishing Group.