Two ocean freighters are slowly making their way from southern ports in Brazil to ports on the East Coast of the United States.

While thousands of such ships dock each year at U.S. ports after trips partway around the globe, these particular vessels, the Maia and the CS Chara, are loaded with soybeans.  They were harvested earlier this year in Brazil and will be part of a series of shiploads to dock at U.S. ports and unload their soybeans, destined to become soybean meal for livestock feed and soybean oil, possibly for biodiesel production.

While hundreds of ships loaded with soybeans make their way annually to China from Brazilian and U.S. ports, there is irony in the Brazilian beans coming to the United States.  Although U.S. farmers produced 3.29 billion bushels of soybeans last year, the third largest soybean crop ever, U.S. soybean exporters sold more soybeans than the U.S. Department of Agriculture expected.  With soybean crushers also running at capacity for the year, the USDA now expects the supply of soybeans to be a drop in the bucket before the 2014 crop is ready for harvest.

Subsequently, the livestock industry, the biodiesel industry, the food industry, and thousands of companies outside those categories won’t not have sufficient supplies of soybean-based products which are needed.  Based on the data of soybeans produced and already used or committed, soybeans have now reached above $15 per bushel.  That is a magnetic price which has drawn the shiploads of beans to the United States and the USDA expects as many as 90 million bushels of soybeans will be imported before the end of the marketing year on Aug. 31.

Irony? Travesty? Unthinkable for the United States to be importing Brazilian soybeans?  Most people would agree to one of those.  After all, traders at the Chicago Mercantile Exchange will likely devalue soybeans when the ships arrive in port and begin unloading.  After all, it is a psychological thing.

But a different way of looking at it came last week from John Baize.  Baize has been a long time consultant to the soybean industry about government treatment of soybeans and international issues affecting the soybean economy.  He isn’t upset at all about the impor of Brazilian soybeans.

Baize looks at it as the perfect scenario for soybean economics.  Scenario, not storm.  According to his calculations, farmers sold their 2013 crop soybeans early in the marketing year at very high prices.  He says we are short of soybeans now, and will be bringing soybeans into the United States from Brazil at much cheaper prices than what farmers sold their soybeans for.  In his words, “It’s a good situation that I think we will see often in the future.”

The Baizian economic theory is parallel to the theory that drives the commodities market of buying low and selling high.  In this case, he says farmers sold high, and now the shortage of soybeans is being replaced by soybeans that are being purchased for lower prices.

The big question is whether the Chicago Mercantile Exchange traders will agree with that economic theory in the next few days when the Maia and the CS Chara ask port authorities for permission to dock and unload.

Even if the traders don’t agree, any bearish reaction won’t last long because of the surging demand for U.S. soybeans, both domestically and abroad.  With demand strong for old crop soybeans in many livestock areas, soybean crushing plants and biodiesel refineries, shortages in those spots will keep prices high, at least in the cash market.



U.S. imports of sugarcane ethanol from Brazil fell by 40% last year, to 242 million gallons. Because Brazil is the largest source of ethanol imports into the United States, this drop led the United States to be a net exporter of the product for the year. Export volumes of corn-based ethanol to Brazil declined, but were more than offset by higher export volumes to Canada and a number of other countries. Although the net level has varied from month to month, since 2011 the United States has both imported ethanol from and exported ethanol to Brazil.

Ethanol is primarily used as a blending component in the production of motor gasoline. The United States and Brazil are the two largest producers and exporters of ethanol in the world, with ethanol being produced from corn feedstocks in the United States and sugarcane in Brazil. Starting in 2010, growing corn harvests and limited growth in the domestic ethanol market led the United States to become a net exporter of ethanol and the world’s leading supplier. At the same time, decreased sugarcane harvests in Brazil led to significant reductions in Brazilian ethanol output and a reversal in traditional ethanol trade patterns, as U.S. volumes began entering Brazil to meet domestic demand.

Brazilian ethanol production recovered in 2012. This reduced Brazil’s need for U.S. ethanol imports, while Brazil exported significant volumes to the United States, largely due to growing U.S. Renewable Fuel Standard (RFS) targets. In addition to the RFS, the California Low Carbon Fuel Standard (LCFS) creates an incentive to import sugar-based ethanol from Brazil because of its lower carbon intensity, seen in imports of ethanol into the West Coast from Brazil.

Brazilian ethanol output typically peaks during the fourth quarter (October-December) of each year. In the fourth quarter of 2013, Brazil had a record sugarcane harvest and increased ethanol production. However, U.S. imports of ethanol from Brazil fell by 95% compared with the fourth quarter of 2012, when drought in the United States pushed domestic production to record low levels. Another major driver was the U.S. Environmental Protection Agency’s (EPA) announcement of proposed reductions to 2014 RFS, as well as growing volumes of biomass-based diesel imports.

The remaining volumes of ethanol imported into the United States from other countries came from Canada or countries that have facilities to convert hydrous sugarcane ethanol originally produced in Brazil to anhydrous ethanol for the U.S market. U.S. ethanol imports enter the country primarily on either the East Coast (PADD 1) or West Coast (PADD 5). West Coast imports of ethanol averaged 30% of total U.S. imports. Despite the geographic disadvantage of shipping Brazilian ethanol to the West Coast compared to other U.S. regions, imports into PADD 5 continued to benefit from the advantage that sugarcane ethanol provides in meeting the California LCFS. The California LCFS regulates the carbon intensity (CI) of gasoline and diesel fuels sold in the state. Depending on the production process, Brazilian sugarcane ethanol has among the lowest CI values of any fuels currently available for meeting the LCFS target.

In 2013, the United States imported 306 million gallons and exported 622 million gallons of ethanol, the latter of which was the third highest annual total on record. The United States remained the world’s largest supplier of fuel ethanol, despite high corn prices and increased domestic demand. Canada received more than half of all U.S. ethanol exports, with its total reaching 325 million gallons last year. U.S. exports to Brazil fell to 33 million gallons, as increasing volumes of Brazilian ethanol were available for domestic consumption. U.S. ethanol exports made their way increasingly to other countries in Latin America, as well as Europe, the Middle East, and new destinations in Asia and Africa. U.S. ethanol was exported for the first time to the Philippines and Tunisia, and large volumes of U.S. ethanol were sent to the United Arab Emirates, Mexico, Peru, and Western Europe.

The trend in 2014 is for the United States to remain a strong net exporter of ethanol, with the potential for substantially larger levels of exports, given the recent abundant corn crop and EPA’s proposed reduction in domestic RFS targets. While favorable blending economics are likely to drive domestic ethanol demand, the United States is likely to remain the world’s leading ethanol supplier. U.S. ethanol import volumes in 2014 will likely be contingent on a combination of Brazilian sugarcane yields, final advanced biofuels RFS targets, and imported volumes of competing advanced biofuels, such as renewable diesel.

Exchange programs have been around for decades, but a new innovative language project is taking it to a more digital level.

The Speaking Exchange project is linking up Brazilian students who need help practicing their English skills with elderly American retirees.

Developed by FCB Brazil and implemented by a CNA language school in Leberdade, Brazil, the pilot program has paired up students with seniors at Windsor Park Retirement Community in Chicago.

A video on how the program works shows pairs carrying on conversations via video chat, discussing their families, hobbies, pasts and futures — developing the most unlikely of friendships and relationships.

The differences in age and background make the interactions remarkable to watch.

One exchange has a young boy in Brazil who smiles as he speaks with an elderly man. The man is seen holding up a black-and-white photo of a couple.

“This is your dad?” the boy asked. The man responded: “That’s me and my wife when we were young!”

“Oh you were good-looking when you were young,” the boy said. “And you’re still good-looking.”

Another interaction has an older woman and a female student, who is talking about her family.

“I love with my older brother. He has 23 years,” the young student said.

The older woman responded: “Do you know instead of saying ‘He has 23 years,’ you could say, ‘He is 23 years old.’”

The recorded videos are then uploaded privately on YouTube for teachers to evaluate student development, according to AdWeek.

“The idea is simple and it’s a win-win proposition for both the students and the American senior citizens,” said Joanna Monteiro, executive creative director at FCB Brazil. “It’s exciting to see their reactions and contentment. It truly benefits both sides.”

One particularly heartwarming conversation is about travel.

“Are you planning someday to go to Brazil?” the young student asked.

“Oh I would like to!” the older man said, to which the student responds with: “You can stay in my house if you want.”

At the end of April, Brazil finally approved the Marco Civil, a landmark bill that enshrines net neutrality and other key Internet principles into law. Earlier in the month, the European Parliament voted in favor of a strong set of net neutrality rules for the continent, bolstered at the last moment in response to pressure from pro-consumer advocates. Meanwhile, here in the United States, the Federal Communications Commission is sparring with public interest advocates and members of Congress who have serious concerns over the FCC’s proposal to reinstate net neutrality protections after the DC court struck down the Open Internet rules in January. Given the importance of protecting a free and open Internet, examples from Sao Paolo and Brussels should inform policymakers as they weigh in on the domestic debate.

In Brazil, net neutrality was officially codified at the beginning of the NETMundial conference, a multistakeholder Internet governance convening in Sao Paolo in late April. The signing of the Marco Civil da Internet—commonly referred to as Brazil’s Internet bill of rights—was a huge victory for advocates of a free and open Internet, who have been pushing for the bill to pass with strong language for years.

The Brazilian victory was hard won. Although the Marco Civil grabbed positive headlines when it was drafted through a largely public consultation process in 2009 and 2010, the landmark legislation has faced an uphill battle recently. Just this March, Eduardo Cunha, a former telecom executive and lobbyist for Brazil’s major telecom companies, led the effort to gut the net neutrality provisions from the bill, which prevents them from charging higher rates for access to bandwidth-heavy content. In response, activists and members of civil society quickly mobilized to “Save the Internet” and called on legislators to protect the open Internet.

Fortunately, Brazilian politicians listened, and when the long-awaited bill passed in April, it included the section on net neutrality. According to the final language, ISPs are not allowed to “offer services in non-discriminatory commercial conditions” and must “refrain from anti-competition practices.”

Similarly, the European Parliament voted for net neutrality rules in early April which outlaw network discrimination through blocking or throttling content and services and prevent anti-competitive commercial agreements. The amended rules also closed the worrisome “specialized services” loophole (what we call “paid prioritization” in the U.S.), attempting to ensure that the language is sufficiently narrow to prevent ISPs from becoming gatekeepers for online content and services.

The reaction from telecom companies in the EU was, unsurprisingly, negative. In an unusual alliance, the four major European telecommunications trade associations joined forces just before the vote to release a statement strongly opposing the reforms, calling the legislation “anti-innovation” and “anti-consumer.” Nonetheless, Members of the European Parliament held their ground and passed the bill with the proposed amendments. The legislation will now go to the Council of Europe for approval (and must be implemented and enforced by the EU member states).

The progress made in Brazil and the EU stands in stark contrast to what’s happening here in the U.S. After the court struck down the Open Internet rules in January 2014, it seemed like the FCC had a clear path to reinstate net neutrality: reclassify broadband as a Title II telecommunications service. Reclassification would allow the FCC to treat broadband providers as common carriers, meaning it could implement clear and strong new rules that would prevent discrimination, blocking, and could even address paid prioritization issues. Instead, a watered down set of proposed rules was leaked to the press last month, which would address some discrimination issues but would create an even larger loophole for ISPs to charge for fast lanes.

Of course, the international comparisons aren’t perfect—and it’s important to remember that with the new EU and Brazilian rules, the specifics of implementation and enforcement are still somewhat unclear. But in both cases, lawmakers took a firm stand on the issue, siding with advocates of a free and open Internet even in the face of fierce lobbying from incumbent service providers. Here in the U.S., the drumbeat of opposition to the FCC’s proposal is growing louder by the day, with Internet companies from startups to giants like Amazon, Google, and Microsoft—not to mention two FCC Commissioners and almost a dozen members of Congress—now calling for stronger rules than what FCC Chairman Tom Wheeler originally put on the table. In response, the Chairman circulated a new draft of the proposed rules, which is a step in the right direction(although some critics have questioned whether it’s just the same proposal in different language). Clearly, there is a lot of work left to be done to secure strong net neutrality protections for Internet users everywhere.



Euroconte is the Brazilian company behind Bátia, one of the country’s oldest, most traditional brands, introduced in 1976 as an export company committed to the shipment of top quality exotic fruits to the international market, pioneering the export of all kinds of products to Europe and the United States, including mangoes, grapes, melons or papayas.

Over all those years we have faced many challenges due to Brazil’s circumstances, such as the dollar/real exchange rate issues, and climatic changes as well,” affirms Denise Braga, who has been in charge of Euroconte since 1995. Over time, the Brazilian export business has naturally experienced some changes. “We used to do a lot of maritime shipments, which require good management to prevent the risk of unforeseen problems, but currently we focus almost exclusively on air shipments.

The reason for the company’s focus on air shipments is twofold. On the one hand, there are marketing motivations, such as in the case of guavas, where demand is not large enough to warrant maritime shipments; on the other hand, it ensures that the fruit arrives in perfect conditions in terms of both appearance and flavour.

“We are very happy with that decision because we created a niche market of great quality fruit. We currently ship, among other products, Palmer mangoes, tropical avocados, and guava, and have become the leading exporter of figs in the past ten years, for which we own a Global G.A.P. certified farm. The only product we ship by sea is ginger, as it has a very long shelf life,” explains Denise.

According to Denise, one of the majors issues for Brazil in recent times have been the changes in the weather. “In November and December last year, for example, with the fig campaign starting, we faced the driest summer on record; a season which is normally a very rainy period. Over time, the length of the avocado season has also changed, being reduced from twelve to seven months.”

Euroconte’s main clients are Europe, Canada, the United States and Asia. “We were the first company to ship figs to Asia, namely to Hong Kong,” says Denise. Figs, of the ‘Purple de Valinhos’ variety, are also the company’s main source of revenue, as unlike other fruits, they have a very long season, lasting from November to August. “Every single day we have a harvest and shipment in order to ensure their freshness, which is a very tough job,” explains Denise. “99% of our figs are exported to Europe, as the U.S. is closed to Brazilian figs due to phytosanitary restrictions.”

There are differences between the characteristics of fruit distributed in the domestic market and that shipped overseas, mainly in terms of appearance, maturation and shape. “Europe, for instance, does not accept fruit with physiological defects, like spots, which makes the selection of fruit for export a very hard process, thus resulting in higher prices. “For this reason, we prefer not to work with the local market, instead, to focus on top quality fruit, enabling us to provide a top quality service to the importers,” concludes Denise Braga.

granite Granite manufacturers are one of many U.S. industries struggling to compete with foreign competition — which makes it odd that the federal government is subsidizing a Brazilian granite project.

The Overseas Private Investment Corporation (OPIC) is a federal agency that subsidizes U.S. businesses that set up operations in foreign countries. In 2012, OPIC approved a $6 million taxpayer-backed loan to support a U.S. company expanding its Brazilian operation that extracts granite and cuts it into slabs for countertops to ship to the U.S. and other countries.

The OPIC subsidy obviously helps the recipient — Wisenbaker Building Supply — but it hurts American companies that excavate granite or shape granite blocks into countertops in the U.S.

U.S. rock quarries have pared back operations over recent decades. In Barre, Vt., jobs in the industry amount to one-third of the1960s peak, Barre Granite Association’s Executive Director Ed Larson told a local newspaper last summer. “Mainly because of foreign competition,” the paper said.

“Imports chip away at Vermont Granite Industry,” a Boston Globe headline declared in 2008. “The competition remains fierce overseas,” the article reported, “where quarry workers earn as little as a few dollars a week. The cost of extracting and cutting the granite is so low that even after the cost of shipping it to the United States it is cheaper than Vermont’s.”

“All the pressure is foreign,” Joe Timilty of Massachusetts-based USA-Granite told me over the phone.

American companies will always complain about foreign competition, but this isn’t a matter of free trade. This is the federal government subsidizing foreign competition.

Wisenbaker is a U.S. construction company with many operations around the globe, including the granite quarry in a rural region of Brazil. The $6 million taxpayer loan was to help Wisenbaker “make investments related to granite quarries in Brazil for export of granite slabs to China and the U.S. for homebuilding industry,” as one OPIC public summary puts it.

The OPIC summary explains that the loan will subsidize excavating and finishing the slabs. As OPIC put it, “The investments will involve purchase of machinery to set up finishing line for granite slabs, completing infrastructure for block yards, purchase or lease of excavation machinery, hiring of personnel and for working capital.”

Many American companies import granite blocks and form them into countertops, and so expanding Wisenbakers’ granite-cutting operation in Brazil hurts U.S. counter-top makers.

Also, hundreds of granite quarries still operate in the U.S. This Brazilian operation is their competition, and the U.S. government is subsidizing it.

OPIC, however, conducted an economic analysis that denies this: “As the current scale of granite production in the United States is not sufficient to meet domestic demand,” the OPIC public summary document reads, “this project does not appear to have the potential for a negative impact on the United States.”

Think about the logic here: OPIC implies that increasing the supply of granite in the U.S. won’t affect the price of granite in the U.S. Give OPIC an “F” in Economics 101.

OPIC spokesman Charlie Stadtlander added that “countertop granite is not the same product as the stone quarried for building stones or headstones.” And most U.S.-quarried granite is used for monuments and buildings.

Timilty points out the flaw in this defense: The reason U.S. quarries don’t bother with countertop granite is because the Brazilians are already doing it at much lower cost — with their cheaper labor and regulatory costs. Subsidizing a Brazilian quarry just exacerbates that problem. If Brazil didn’t have such a cost advantage, American quarries would be turning out countertops.

Timility put it plainly: “The more you help these guys produce stuff, the more they ship here, the less the price is, the less guys here cut stone.”

So why is the federal government subsidizing the project? If you question this subsidy, you’re questioning the purpose for OPIC’s existence.

OPIC’s charter expires at the end of this fiscal year — Sept. 30. Some conservatives on and off Capitol Hill have called for the end of OPIC, blasting it as corporate welfare.

The House passed a foreign aid bill May 8 that would reauthorize the agency. The Senate has yet to act on the measure.

Timothy P. Carney, The Washington Examiner’s senior political columnist


Even after huge nationwide protests last June, when millions of Brazilians took to the streets to vent anger at ineffectual politicians, President Dilma Rousseff’s approval rating never dipped below 45%—and then rebounded. And even though more Brazilians tell pollsters they want “change” rather than “continuity”, few pundits expect Ms Rousseff’s Workers’ Party (PT) to be booted out in October’s presidential election after 12 years in power. But an upset may be on the cards.

Around 48% of Brazilians now approve of the president, down from roughly 55% in February. Her fall in popularity is at last beginning to translate into support for her two main rivals: Aécio Neves (pictured left), a senator who heads the Party of Brazilian Social Democracy (PSDB), and Eduardo Campos (pictured right), leader of the Brazilian Socialist Party (PSB). They continue to trail Ms Rousseff but the gap has narrowed, especially with Mr Neves. He is now just ten points behind the president if it were a straight second-round race, down from 23 points two months ago.

As voters learn more about the anti-Dilma duo—both are still little-known outside their home states—they will spot some uncanny parallels. At 54 and 48, respectively, Mr Neves and Mr Campos are younger than Ms Rousseff, who is 66, and belong to a generation of Brazilian politicians who came of age after the end of the military dictatorship in 1985. Both are scions of political dynasties; each cut his teeth as an aide to a prominent grandfather. (Tancredo Neves was the first president elected after army rule but died before taking office; Miguel Arraes, Mr Campos’s forebear, ruled Pernambuco before and after the junta.)

Both are trained economists. Both served stints as congressmen, then went on to become successful governors. In 2003-10 Mr Neves turned Minas Gerais, Brazil’s second-most-populous state, from a basket case into one of the country’s best-run states. His “management shock”, carried out by a team of able technocrats, involved cutting costs, boosting tax revenues, setting performance targets, capping public-sector pay and leaving 3,000 jobs unfilled rather than handing them over to political placemen. Poverty fell faster than in Brazil as a whole; the state now boasts the country’s best-performing pupils. Mr Campos emulated this approach in Pernambuco, in Brazil’s poor north-east, with equally impressive results from 2007 until last month, when he stepped down to focus on his candidacy. Both faced down unions opposed to reforms and were re-elected by big margins.

Small wonder, then, that Mr Neves and Mr Campos see eye to eye in many areas, especially on the economy. Armínio Fraga, an admired former central banker who is Mr Neves’s chief economic adviser, bashes Ms Rousseff for too little macroeconomic discipline (swelling budget deficits, persistently high inflation) and too much microeconomic intervention (suppressed petrol and electricity prices, subsidised credit from state-controlled banks). Eduardo Giannetti, a professor at Insper business school who is close to Mr Campos, recites the same criticisms nearly word for word.

Businessmen and bankers come out of meetings with both men purring. Both want to grant independence to the central bank, simplify Brazil’s convoluted tax system, slash the number of ministries (which has ballooned from 26 to 39 under PT rule), and do more to drum up private investment in much-needed infrastructure.

But many see Mr Neves as a better bet than the PSB leader, whose party’s bylaws still call for “common ownership of the means of production”. João Doria Jr, an entrepreneur and founder of Lide, an employers’ federation, which invited both men to a powwow in Bahia earlier this month, says that Mr Neves has so far been “more assertive” in articulating his market-friendliness, citing proposals such as a six-month deadline for tax reform.

Racing uncertainty

Mr Neves’s talk of “unpopular measures” is honeyed by an affable manner, mischievous grin and fun-loving image. But it still leaves him open to charges of elitism. To mitigate that same risk to his campaign, Mr Campos has forged an electoral alliance with Marina Silva, a popular former senator and environmentalist who came third in the presidential race of 2010.

João Castro Neves (no relation) of Eurasia Group, a political consultancy, thinks that Mr Campos and Ms Silva will strive to portray themselves as the true heirs of Luiz Inácio Lula da Silva, Ms Rousseff’s mentor and predecessor. Lula enjoys sainted status among Brazil’s poor thanks to the generous cash-transfer programmes he introduced, but also earned grudging respect from the markets for not reversing economic reforms under the previous PSDB government of Fernando Henrique Cardoso, president from 1994 to 2002. Mr Campos and Ms Silva, who held the science and environment portfolios respectively during Lula’s first term, will claim that Ms Rousseff has wasted this progressive legacy.

Mr Campos is also banking on Ms Silva’s presence as his running-mate to attract growing ranks of her fellow evangelicals, as well as better-educated, wealthier Brazilians, especially in big southern cities like São Paulo and Rio de Janeiro, where the PSB is weak. But her—and her base’s—principled opposition to relaxing the onerous environmental-licensing regime scares employers. In private, businessmen cite the “Marina factor” as a concern.

Another is the strength of Mr Campos’s team. He surrounds himself with north-eastern business folk and can apparently count on the support of the Setúbal family, the clan behind Itaú, a big bank. He also inherited two top-notch economists from Ms Silva: Mr Giannetti and André Lara Resende, who helped vanquish hyperinflation 20 years ago. But neither has shown much interest in joining a potential Campos cabinet. Mr Neves, by contrast, has a crack team ready to take the reins, many with hands-on policymaking experience in the Cardoso administration.

That, combined with Mr Neves’s ideological clarity and strong party structures in the biggest states, puts him in better stead to challenge Ms Rousseff, reckons Alberto Almeida, a psephologist at Instituto Análise, another consultancy. Ms Rousseff remains the favorite to win. Unemployment is at historic lows and disposable incomes are unlikely to slide between now and October (although the possibility of protests at the World Cup may provide a focus for discontent). She will enjoy more free TV time than Messrs Neves and Campos put together. But she is in fight.