VZCZCXRO0064
RR RUEHRG
DE RUEHBR #2233/01 2981903
ZNR UUUUU ZZH
R 251903Z OCT 06
FM AMEMBASSY BRASILIA
TO RUEHRC/USDA FAS WASHDC
INFO RUEHSO/AMCONSUL SAO PAULO 8427
RUEHRI/AMCONSUL RIO DE JANEIRO 3168
RUEHRG/AMCONSUL RECIFE 5719
RUEHBU/AMEMBASSY BUENOS AIRES 4364
RUEHMN/AMEMBASSY MONTEVIDEO 6554
RUEHAC/AMEMBASSY ASUNCION 5745

UNCLAS SECTION 01 OF 02 BRASILIA 002233 
 
SIPDIS 
 
USDA FOR DUS TERPSTRA/ITP PAT SHEIKH/DLP HOWARD WETZEL 
FAA CHUCK ALEXANDER 
STATE PASS USTR:SCRONIN/MSULLIVAN 
 
TOFAS 158 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR EINV ETRD ENRG PREL PGOV BR
SUBJECT: THE AMBASSADOR'S SEPTEMBER 28 MEETING WITH BRAZILIAN 
MINISTER OF AGRICULTURE GUEDES 
 
 
¶1. (SBU) SUMMARY: AMBASSADOR SOBEL, ACCOMPANIED BY EMBASSY 
AGRICULTURAL AND ECONOMIC COUNSELORS, MET WITH MINISTER OF 
AGRICULTURE LUIS CARLOS PINTO GUEDES ON SEPTEMBER 28 TO DISCUSS 
GENERAL AGRICULTURAL ISSUES.  DISCUSSION CENTERED ON BRAZIL'S RAPID 
RISE AS A WORLD AGRICULTURAL EXPORT POWER, U.S. INTEREST IN 
RESTORING U.S. ACCESS TO BRAZIL'S CATTLE AND BEEF MARKETS (CURRENTLY 
LIMITED BY BSE-RELATED TECHNICAL RESTRICTIONS), APPROVAL OF GMO 
PRODUCTS, AND BIOFUELS.  THE MINISTER SAID HIS STAFF IS OPEN TO 
TECHNICAL DISCUSSIONS ON BSE RESTRICTIONS CURRENTLY IN PLACE, BUT 
THERE SEEMED LITTLE PROMISE OF REMOVING THE BARRIERS SOON.  THE 
MINISTER ALSO INDICATED THAT THEY ARE PRESSING THE MINISTRY OF 
FOREIGN AFFAIRS TO ELIMINATE A REQUIREMENT THAT ALL USDA OFFICIAL 
CERTIFICATES RELATED TO TRADE IN ANIMAL PRODUCTS BE STAMPED BY A 
CONSULAR OFFICIAL IN THE UNITED STATES, WHICH PUTS U.S. EXPORTERS AT 
A DISADVANTAGE. POST IS FOLLOWING UP WITH BOTH MINISTRIES.  END 
SUMMARY. 
 
BRAZIL'S AGRICULTURAL RESEARCH MACHINE: EMBRAPA 
 
¶2. (SBU) AMBASSADOR SOBEL ASKED MINISTER GUEDES HOW BRAZIL WAS ABLE 
TO BUILD ITS ENORMOUS AGRICULTURAL PRODUCTION AND EXPORT CAPACITY IN 
SUCH A SHORT TIME, WHICH RESULTED IN ABOUT US $35 BILLION IN WORLD 
EXPORTS IN 2005, A 130 PERCENT INCREASE SINCE 1999.  MINISTER GUEDES 
NOTED FOUR REASONS FOR BRAZIL'S SUCCESS:  1)THE COUNTRY'S NATURAL 
COMPARATIVE ADVANTAGES IN AVAILABLE LAND, SOIL, AND CLIMATE; 2)ITS 
LARGE INVESTMENT IN AGRICULTURAL RESEARCH OVER THE PAST 30 YEARS; 
3)PRESCIENT PUBLIC POLICIES, MAINLY IN TERMS OF LOW-COST 
AGRICULTURAL FINANCING; AND 4)THE FLEXIBILITY AND ENTREPRENEURSHIP 
OF RURAL PRODUCERS.  THESE FOUR FACTORS, THE MINISTER SAID, WERE, 
AMONG OTHERS, WHY BRAZIL IS SUCH A LOW-COST PRODUCER, PARTICULARLY 
FOR SOYBEANS AND ORANGE JUICE. 
 
¶3. (SBU) MINISTER GUEDES DESCRIBED EMBRAPA (THE BRAZILIAN 
AGRICULTURAL RESEARCH CORPORATION, A PART OF THE MINISTRY OF 
AGRICULTURE) AS ONE OF THE WORLD'S MAJOR AGRICULTURAL RESEARCH 
INSTITUTIONS.  BRAZIL WAS ABLE TO OPEN UP THE CERRADOS REGION (THE 
HIGHLAND PLAINS IN THE WESTERN STATES OF GOIAS, MATO GROSSO, AND 
MATO GROSSO DO SUL) TO CULTIVATION, A FEAT FEW BELIEVED POSSIBLE, 
LARGELY AS A RESULT OF VARIETAL CROP RESEARCH DONE AT EMBRAPA. 
GUEDES NOTED THAT USAID GRANTS AND BILATERAL SCIENTIFIC EXCHANGE 
EFFORTS THAT PREDATED EMBRAPA HAD HELPED SPUR ALONG MUCH OF THE 
CERRADOS RESEARCH. 
 
¶4. (SBU) THE AMBASSADOR INQUIRED ABOUT CURRENT BILATERAL EXCHANGE ON 
RESEARCH AND IF IT MIGHT BE POSSIBLE TO BUILD FURTHER RELATIONS 
BETWEEN BRAZILIAN AND U.S. RESEARCH LABS AND ACADEMIC INSTITUTIONS. 
THE MINISTER NOTED THAT SUCH BONDS HAVE BEEN STRONG SINCE THE 1960S, 
WITH BRAZILIAN INSTITUTES COOPERATING WITH U.S. COUNTERPARTS SUCH AS 
OHIO, PURDUE, AND WISCONSIN.  THE MINISTER ALSO POINTED OUT THAT 
THROUGH IMPETUS OF THE U.S.-BRAZIL CONSULTATIVE COMMITTEE ON 
AGRICULTURE (CCA), ESTABLISHED IN 2004, USDA'S AGRICULTURAL RESEARCH 
SERVICE AND EMBRAPA HAVE EXCHANGED RESEARCHERS ON A LONG-TERM BASIS 
UNDER A PROGRAM CALLED LABEX, WITH THE AIM TO IMPROVE COOPERATION ON 
TECHNICAL ISSUES RELATED TO TRADE.  WHILE PREVIOUSLY MUCH OF THE 
COOPERATION ON RESEARCH WAS PURSUANT TO FORMAL AGREEMENTS, 
CURRENTLY, HE SAID, IT WAS MORE OR LESS SPONTANEOUS.  THE MINISTER 
LATER REFLECTED THAT THERE MIGHT BE SOME OPPORTUNITIES TO COOPERATE 
IN THE AREA OF TRAINING ADVANCED GRADUATE LEVEL UNIVERSITY 
STUDENTS. 
 
ETHANOL RESEARCH 
 
¶5. (SBU) REGARDING ETHANOL RESEARCH, WHICH IS APPARENTLY FULLY 
FUNDED IN BRAZIL BY THE PRIVATE SECTOR, ANGELO BRESSAN FILHO, 
DIRECTOR OF THE SECRETARIAT OF PRODUCTION AND AGROENERGY, MINISTRY 
OF AGRICULTURE, WHO IS THE MINISTRY'S LINK TO EMBRAPA, SPOKE ABOUT 
ONGOING RESEARCH INTO CELLULOSIC ETHANOL.  CURRENTLY, INVESTIGATION 
WAS PROCEEDING ON TWO TRACKS, HE SAID.  RESEARCHERS WERE LOOKING AT 
THE ENZYMATIC ROUTE, WHEREBY CELLULOSE IS CONVERTED INTO SUGAR AND 
THEN INTO ALCOHOL.  THE CHEMICAL REACTION UNDERLYING THIS PROCESS, 
HOWEVER, HAS THE DISADVANTAGE OF BEING SLOW:  25 TO 30 MINUTES.  AN 
ALTERNATIVE ROUTE, THE ACIDIC PROCESS, IS QUICKER:  5 TO 8 MINUTES. 
THE MINISTER NOTED THAT CELLULOSIC RESEARCH HOLDS GREAT PROMISE 
GIVEN THE VAST AMOUNT OF RESIDUE LEFT IN SUGAR CANE FIELDS AFTER 
HARVEST. 
 
¶6. (SBU) ON ETHANOL, DISCUSSION CENTERED ON HOW BRAZIL PLANNED TO 
PARTNER WITH THIRD COUNTRIES TO HELP DEVELOP THE MARKET.  THE 
AMBASSADOR INQUIRED WHETHER THE BRAZILIAN GOVERNMENT OR PRIVATE 
SECTOR WAS LOOKING TO OTHER COUNTRIES TO HELP SUPPLY SUGAR STOCKS. 
 
BRASILIA 00002233  002 OF 002 
 
 
BRESSAN REPLIED NEGATIVELY, NOTING THAT BRAZILIAN PRODUCTION WAS 
EXPANDING RAPIDLY AND THE COUNTRY WAS OPENING 12-16 NEW REFINERIES 
PER YEAR.  FROM THE MINISTRY'S POINT OF VIEW, HE SAID, WHERE THERE 
MIGHT BE SOME BRAZILIAN INVOLVEMENT OVERSEAS WOULD BE IF THE PRIVATE 
SECTOR WERE TO SUPPLY CONSULTANTS TO INTERESTED FOREIGN GROWERS.  HE 
REVEALED THAT HE PLANNED TO TRAVEL TO GUATEMALA THE FOLLOWING WEEK 
AND THAT THERE IS CONTINUING INTEREST FROM INDIA. 
 
APPROVAL OF GMO'S 
 
¶7. (SBU) THE AMBASSADOR ASKED HOW GENETICALLY MODIFIED ORGANISMS ARE 
VIEWED IN BRAZIL.  MINISTER GUEDES STATED THAT THERE IS FINALLY A 
FEDERAL FRAMEWORK IN PLACE FOR DEALING WITH GMO ISSUES.  CTNBIO, A 
27-MEMBER BODY IN WHICH 11 MINISTRIES PARTICIPATE, REGULATES THE 
FIELD.  CTNBIO, CHAIRED BY THE MINISTRY OF SCIENCE AND TECHNOLOGY, 
HAS APPROVED 14 GMO REQUESTS FOR RESEARCH AND 8 FOR COMMERCIAL SALE 
(EACH REQUEST IS FOR A SINGLE GENE).  CURRENTLY, 9 REQUESTS ARE 
PENDING, PRINCIPALLY FOR SOY, COTTON, AND CORN.  ALTHOUGH STUDIES ON 
SUGAR ARE ONGOING, NO REQUESTS FOR SUGAR ARE PENDING. 
NOTWITHSTANDING THE FACT THAT EMBRAPA IS A GOVERNMENT ENTITY, IT 
ALSO NEEDS CTNBIO APPROVAL BEFORE PROCEEDING.  THE MINISTER NOTED 
THAT THE ENVIRONMENTAL LOBBY, WHICH WORKS CLOSELY WITH THE MINISTRY 
OF THE ENVIRONMENT, HAS SOUGHT TO HINDER CTNBIO FROM MOVING 
FORWARD. 
 
OUTSTANDING TRADE IRRITANTS REGARDING ANIMAL PRODUCTS 
 
¶8. (SBU) THE AMBASSADOR RAISED U.S. INTEREST IN RESTORING ACCESS TO 
BRAZIL'S MARKETS FOR CERTAIN CATTLE AND BEEF PRODUCTS (BREEDING 
CATTLE, BONELESS BEEF AND CATTLE BLOOD), WHICH IS CURRENTLY LIMITED 
BY BSE-RELATED TECHNICAL RESTRICTIONS THAT THE U.S. VIEWS AS NOT 
SCIENCE-BASED.  THIS MATTER WAS RAISED AT THE BILATERAL CONSULTATIVE 
COMMITTEE ON AGRICULTURE (CCA) IN 2005, THROUGH AN OFFICIAL U.S. 
DEMARCHE MADE TO THE MINISTRIES OF AGRICULTURE AND FOREIGN AFFAIRS 
IN APRIL, AND IN A FOLLOW-UP OFFICIAL LETTER FROM THE EMBASSY IN 
EARLY SEPTEMBER.  THE MINISTER SMILED AND SAID THAT BRAZIL WOULD 
ALSO LIKE TO HAVE ACCESS TO THE U.S. MARKET FOR FRESH BEEF, THEN 
OFFERED THAT HIS STAFF MEET WITH USDA COUNTERPARTS FOR TECHNICAL 
DISCUSSIONS ON BSE RESTRICTIONS.  IN A FOLLOW-UP MEETING, THE 
EMBASSY AGRICULTURAL COUNSELOR AND APHIS STAFF MET WITH THE 
INTERNATIONAL OFFICE OF THE MINISTRY OF AGRICULTURE;  BOTH SIDES 
AGREED TO ARRANGE  A BILATERAL TECHNICAL MEETING IN EARLY 2007. 
 
¶9. (SBU) THE AMBASSADOR ALSO ASKED ABOUT THE STATUS OF BRAZIL'S 
EFFORTS TO ELIMINATE ITS ANTIQUATED REQUIREMENT THAT ALL USDA 
OFFICIAL DOCUMENTS RELATED TO EXPORTS OF U.S. ANIMAL PRODUCTS HAVE A 
CONSULAR STAMP FROM A BRAZILIAN CONSULATE IN THE UNITED STATES 
BEFORE ACTUAL SHIPMENTS CAN ENTER BRAZIL.  THIS REQUIREMENT 
INCREASES RED TAPE AND COSTS AND, THEREBY, PUTS U.S. EXPORTERS AT A 
DISADVANTAGE.  THE U.S. FIRST RAISED THIS ISSUE DURING THE FIRST 
MEETING OF THE CCA IN 2004 AND BRAZIL PROMISED RESOLUTION.  A FORMAL 
LETTER FROM EX-MINISTER PRATINI DE MORAES TO FORMER U.S. SECRETARY 
VENEMAN ALSO PROMISED TO RESOLVE THE ISSUE.  THE DECREE DATES FROM 
¶1952. THE MINISTER SAID HIS STAFF WAS WAITING FOR A RESPONSE FROM 
THE MINISTRY OF FOREIGN AFFAIRS, THE MINISTRY THAT MUST TAKE ACTION. 
STEPS FOR A SOLUTION TO THIS ISSUE WERE EXPLORED IN THE FOLLOW-UP 
MEETING BETEEN THE EMBASSY AGRICULTURAL COUNSELOR AND THE 
ITERNATIONAL OFFICE OF THE MINISTRY OF AGRICULTURE.MINISTRY STAFF 
REQUESTED THAT THE EMBASSY RAISE HIS ISSUE WITH THE MINISTRY OF 
FOREIGN AFFAIRS INAN EFFORT TO ENCOURAGE A FAVORABLE LEGAL OPINIONON THIS ISSUE. A DIPLOMATIC NOTE IS BEING SENT FRO THE EMBASSY TO 
THE FOREIGN MINISTRY TO THIS END BUT MOVEMENT ON THIS OUTSTANDING 
TRADE ISSUE ISNOT EXPECTED UNTIL  AFTERTHE OCTOBER 29 PRESIDENTIAL 
ELECTIONS. 
 
THIRD OUNTRY COOPERATION 
 
¶10. (SBU) THE MINISTER OF AGICULTURE RAISED WITH THE AMBASSADOR THE 
IDEA OF WORKING TOGETHER ON AGRICULTURAL RESEARCH IN AFRICA.  HE 
SUGGESTED INVOLVING SELECT AFRICAN COUNTRIES, BRAZILIAN AGRICULTURAL 
RESEARCHERS, AND U.S. INTEREST GROUPS OR INSTITUTIONS.  UNDER THE 
MINISTER'S PROPOSAL, THE U.S. WOULD SUPPORT BRAZILIAN TEACHING 
FELLOWSHIPS FOR BRAZILIAN DOCTORAL CANDIDATES IN LUSO-PHONE AFRICA. 
SUCH TRILATERAL COOPERATION, THE MINISTER DECLARED, WOULD BENEFIT 
BOTH BRAZIL AND THE U.S. AS WELL AS THE AFRICAN COUNTRIES INVOLVED. 
THE AMBASSADOR REPLIED THAT THE USG WAS ALREADY WORKING WITH THE MFA 
ON SIMILAR INITIATIVES FOR LUSO-PHONE AFRICA AND WE COULD PUT THE 
MINISTER'S SUGGESTIONS INTO THE MENU OF POSSIBILITIES. 
 
SOBEL