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DE RUEHBR #0316/01 0541447
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R 231447Z FEB 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 8179
INFO RUEHLP/AMEMBASSY LA PAZ FEB LIMA 3376
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UNCLAS BRASILIA 000316 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USTR: S CRONIN 
DEPT PASS USAID TO LAC/RSD, LAC/SAM, G/ENV, PPC/ENV 
TREASURY FOR USED IBRD AND IDB AND INTL/MDB 
USDA FOR FOREST SERVICE: LIZ MAHEW 
INTERIOR FOR DIR INT AFFAIRS: K WASHBURN 
INTERIOR FOR FWS: TOM RILEY 
INTERIOR FOR NPS: J PUTNAM 
INTERIOR PASS USGS FOR INTERNATIONAL: J WEAVER 
JUSTICE FOR ENVIRONMENT AND NATURAL RESOURCES: JWEBB 
EPA FOR INTERNATIONAL: CAM HILL-MACON 
USDA FOR FAS AND ARS/INTERNATIONAL RESEARCH: G FLANLEY 
NSF FOR INTERNATIONAL: HAROLD STOLBERG 
DOE GOR G WARD 
 
E.O. 12958: N/A 
TAGS: SENV EAGR ENRG EAID TBIO SNAR ECON SOCI XR BR
SUBJECT:  ETHANOL IN THE RAINFOREST: GLOBAL COMMODITIES AND HIGHWAY 
EXPORT CORQS TRANSFORMING THE FACE OF THE SOUTHWEST AMAZON 
 
¶1.  Summary:  USAID Mission officers and the Regional Environmental 
Affairs Officer visited the Southwest Amazon February 4-10, 2007 (en 
route to the Amazon Basin Conservation Initiative meeting in Yucay, 
Peru) on a 550- kilometer road trip connecting Rio Branco, capital 
of the state of Acre, with Puerto Maldonado, capital of Madre de 
Dios Department, Peru.  This route will soon form a paved export 
corridor extending to the Peruvian port of Ilo.  The group witnessed 
vastly different land-use practices between the two countries and 
sweeping changes taking place in the region as new highway corridors 
link this isolated region with Pacific ports.  In a landscape 
predominated by pastureland on what was formerly lush rainforest, 
the group was surprised to see a large expanse of sugar cane and a 
recently-installed ethanol plant near the Brazilian town of 
Capixaba.  Every indication is that sugar cane cultivation has 
joined cattle ranching and soybean cultivation as a profitable 
enterprise in the Brazilian rainforest, putting yet more pressure on 
this unique ecosystem.  END SUMMARY. 
 
WHERE HAVE ALL THE TREES GONE? 
 
¶2.  Much of the tropical rainforest in a wide swath along the BR-317 
highway between Rio Branco and Assis Brasil, Acre was cleared 
decades ago in a first wave of settlement of ranchers from southern 
Brazil starting in the 1970s.  The landscape for most of the 330 
kilometer distance between the state capital and the border with 
Peru is one of unbroken cattle pastures with a few patches of farm 
woodlots and scattered solitary giant Brazil nut trees providing the 
only shade for the zebu cattle.  Just beyond the horizon to the 
northwest of the BR-317 highway, the Chico Mendes Extractive Reserve 
protects one million hectares of rainforest and the livelihoods of 
traditional rubber tappers and Brazil nut collectors.  The 220-km 
stretch of un-paved road between border town Inapari and Puerto 
Maldonado, Peru is also largely deforested, although blocks of 
largely intact forest still exist, apparently supporting the 
economies of small towns that depend on Brazil nut collecting for a 
living. 
 
TAMING THE RAINFOREST: DEFORESTATION BY ANOTHER NAME 
 
¶3.  The mindset in Acre state several decades ago was one that 
equated development with conversion of the rainforest to "higher and 
better" use, mainly speculative cattle ranching.  In spite of the 
ease with which rainforest trees will burn when felled and piled up 
during the dry season, it still takes a number of years to "tame" 
the land, removing stumps and re-sprouting roots to prepare 
unimpeded farm or pastureland.  Even though ranchers profited from 
land speculation, many cattle operations failed because of lack of 
pasture technology adapted to the humid tropics.  Unfortunately, 
taming the rainforest also involved land grabbing and serious 
clashes with traditional populations of rubber tappers and Brazil 
nut collectors, culminating in the murder of rubber tapper leader 
Chico Mendes at his home QXapuri, Acre in December 1988. 
 
FLORESTANIA: GOVERNANCE ON THE AMAZON FRONTIER 
 
¶4.  Eight years ago, Chico Mendes' protege governor Jorge Viana 
began to change the state mindset by establishing the "government of 
the forest", recognizing the value of Acre's standing forests for 
the benefit of the state's population.  Many new conservation areas 
were established under Viana's leadership.  Viana was recently 
succeeded by Binho Marques, who intends to continue extending 
citizen benefits to rainforest dwellers, while dealing with changing 
realities brought on by advancing roads and agribusiness, ending 
Acre's isolation from the rest of the world.  In recognition of the 
economic potential of the standing forest, USAID's "Amazoniar" 
consortium of local NGOs is helping traditional populations and 
settler communities in the Southwest Amazon establish sound, 
sustainable, income-generating forest management practices. 
 
THE GRASS IS GREENER 
 
¶5.  Pasture technology developed by Embrapa, Brazil's agricultural 
research enterprise, eventually sparked a second wave of 
entrepreneurial cattle ranching on degraded pasture lands depleted 
of nutrients after the illusory first flush of productivity derived 
from rainforest ashes.  Part of this new technology involves 
establishment of African pasture grasses such as Brachiaria 
brizantha in consortium with nitrogen-fixing forage legumes such as 
tropical kudzu (Pueraria phaseoloides), producing greener, more 
palatable pastures.  The result is nutritive long-lasting 
pastureland capable of supporting healthy productive cattle herds - 
the predominant landscape along much of the BR-317 highway today. 
Much to the dismay of environmentalists, today's reality is that 
Amazon cattle ranching is a profitable enterprise with sights on 
even more lucrative international markets with eventual control of 
hoof-and-mouth disease. 
 
GREEN ALCOHOL? 
 
¶6.  To our surprise, the constant landscape of cattle pastures in 
Acre was broken near the town of Capixaba by a twelve-kilometer 
expanse of sugar cane, extending as far as the eye could see.  A 
road sign announcing inauguration of the Farias Group's "Alcool 
Verde" operation stood next to neatly organized plots of a sugar 
cane variety trial.  The Farias Group, which already operates 
distilleries in Sao Paulo, Goias, and northeastern Brazil expects to 
harvest 1.5 million tons of cane starting in 2008 (a ton of sugar 
cane can produce 80 liters of ethanol; a hectare of cane can produce 
over six thousand liters of ethanol; the production of ethanol from 
this distillery alone would supply a fleet of 72,000 flex-fuel 
economy cars for one year - more than the total fleet of Rio Branco, 
Acre), ramping up to 3.5 million tons yearly with addition of a mill 
designed for sugar export through Pacific ports.  Calculating a 
yield of 75 tons of cane per hectare, the Farias Group will occupy 
twenty thousand hectares at startup of their operation, growing to 
almost fifty thousand hectares at peak production.  NOTE:  During 
the Common Agenda for the Environment meeting in Brasilia in late 
2006, a high level official in the Brazilian Foreign Ministry 
claimed that environmental concerns over expansion of biofuels are 
overblown, stating that "it is scientifically proven that you can't 
grow sugar cane in the rainforest".  End Note. 
 
SUGAR CANE IN THE RAINFOREST 
 
¶7.  Conversion of established pastureland to cultivation of sugar 
cane in this former rainforest landscape is made easier by years of 
"taming" the land, making it ready for mechanized cultivation with 
little further investment.  That rainforest land in the Southwest 
Amazon is suitable for sugar cane cultivation should come as no 
surprise - almost all of the cane grown in Brazil, including the 
highly productive sugar cane operations in Sao Paulo state, occupies 
land that was once Atlantic Rainforest.  Nevertheless, the success 
of sugar cane cultivation in the Southwest Amazon could exert 
pressure to clear additional rainforest land as displaced cattle 
operations seek out new lands to expand, a phenomenon that has been 
documented in Mato Grosso state where soybeans replaced pastureland. 
 
 
THE ROAD TO THE PACIFIC: A TWO-WAY STREET 
 
¶8.  Brazilian entrepreneurs, encouraged by the success of cattle 
ranching and increasing industrialization in the Southwest Amazon, 
are setting their sights on Asian markets with the soon-to-be 
completed paving of the road to the Pacific port of Ilo, Peru.  The 
330-km road between state capital Rio Branco and border town Assis 
Brasil is already paved, and the 220-km distance between Peruvian 
border town Inapari and department capital Puerto Maldonado is in 
the process of being paved, but currently offers a very suitable 
hard-packed clay surface for unimpeded transportation at least 
during the dry season.  Additional road segments will soon connect 
the 1470-km route from Brazil's southwest Amazon border to the 
Pacific port of Ilo, Peru (Cuzco is 740 km distant and Lima is 1871 
km from Assis Brasil).  Although it is unlikely that raw soybeans 
produced in the Southwest Amazon would be trucked over the Andes, 
timber, processed meat, soy meal and oil, and sugar and ethanol are 
likely candidates for Pacific export.  Road paving should also open 
Puerto Maldonado's already well-established rainforest ecotourism 
industry to an even greater influx of tourists. However, recent 
stories of drug-running and trafficking in persons from Peru to 
Brazil along this route and first-hand experience of embassy 
travelers raises cause for concern over governance of this largely 
unguarded porous border region. 
 
MAP: THE OTHER TRI-BORDER 
 
¶9.  The department of Madre de Dios, Peru, Acre state, Brazil, and 
the department of Pando, Bolivia meet at a speck on the map where 
Arroyo Yaverija meets the Rio Acre, forming a region known by the 
acronym MAP.  A recently inaugurated bridge links the town of Assis 
Brazil with the even smaller town of Inapari.  A new road will soon 
connect the capital of Pando, Cobija, with Iberia on the 
Inapari-Puerto Maldonado road.  The whole region is on the verge of 
transformation as isolated populations and lands connect with 
Brazilian and Asian markets.  Recognizing past mistakes in Amazon 
boom-and bust economic development, local residents in the MAP 
region have been meeting periodically for the past eight years to 
discuss options for orderly development of the region.  USAID 
provides modest small grant funding for events that support this 
dialogue, which has progressed from an academic exercise to a 
grass-roots movement of concerned citizens, local authorities, and 
enlightened entrepreneurs hoping to establish effective governance 
over economic development of the MAP region. 
 
WHERE HAVE ALL THE CATTLE GONE? 
 
¶10.  With the exception of a few very prosperous cattle operations, 
the largely treeless landscape along the Peruvian stretch of the 
inter-oceanic highway was devoid of cattle.  Some pastures consisted 
of Brachiaria ruziensis, a less palatable African grass established 
in the Amazon decades ago, but now little used in Brazil.  However, 
much of the cleared land on the Peruvian side was simply overgrown 
with secondary forest, an indication that pastures were abandoned 
after depletion of the first flush of rainforest ash fertility. 
Several tree plantations of teak (Tectona grandis - a Southeast 
Asian species) showed signs of having been killed by accidental 
fires (note: the Southwest Amazon suffered a record drought and 
subsequent fires in 2005, possibly linked to the same Atlantic 
phenomenon that spawned Hurricane Katrina).  However, paving the 
road from Inapari to Puerto Maldonado will surely attract cattle 
ranchers adopting Brazilian pasture technology.  The question for 
the future of the Southwest Amazon portions of Peru, Brazil, and 
Bolivia is whether traditional extractive economies (rubber and 
Brazil nuts were traded as global commodities a century ago) can 
co-exist with production of the newer global commodities of tropical 
hardwoods, beef, soy, sugar, and ethanol. 
 
TAMING AGRIBUSINESS: RESPONSIBLE SOURCING COMES TO THE AMAZON 
 
¶11.  A recent development in the Brazilian Amazon, following on 
technological advances that have cattle ranchers, soy growers, and 
ethanol producers eyeing export markets, is corporate concern that 
company purchasing practices could be perceived as detrimental to 
Amazon forest conservation.  Responsible timber sourcing has become 
the norm for European and increasingly for U.S. markets interested 
in Amazon hardwoods.  In a remarkable move, in July 2006 members of 
the Brazilian oil processing association ABIOVE pledged not to 
purchase soybeans grown on newly-cleared Amazon rainforest land 
deforested after the date of the announcement (the initial two-year 
purchasing moratorium is expected by many observers to become 
permanent).  Lucas do Rio Verde, Mato Grosso, the second-largest soy 
producing municipality in Brazil, has pledged to work towards having 
100% of its farmers in compliance with Brazil's strict conservation 
set-aside laws.  Cattle ranchers in Mato Grosso are forming the Land 
Alliance to promote environment-friendly ranching practices and to 
demonstrate compliance with these same conservation set-aside laws. 
An equivalent responsible production movement in the ethanol 
industry is still in its formative stages.  USAID is working with 
The Nature Conservancy, Woods Hole Research Center, and Brazilian 
NGOs Amazon Institute for Environmental Research (IPAM) and the Land 
Alliance to encourage responsible corporate sourcing in Amazon grain 
and cattle industries and to assure independent monitoring of 
farming practices in compliance with Brazil's environmental 
standards.  Similar efforts by the mission to support responsible 
biofuel production would be beneficial as the U.S. and Brazil 
develop plans for cooperation on ethanol. 
 
CONCLUSION 
 
¶12.  Comment:  Large scale infrastructure development such as the 
paving of the inter-oceanic highway has greatly reduced the 
remoteness of the Southwest Amazon.  Growing linkages to regional 
and global markets for timber, soybeans, cattle, and increasingly 
sugar cane ethanol, coupled with mechanization of both forest 
clearing and crop production, (in tandem with modern entrepreneurial 
cattle ranching) could provoke simultaneous intensification and 
expansion of land use at the heart of the Southwest Amazon. A 
 
comprehensive suite of initiatives including independent 
certification schemes attesting to environmental soundness of 
farming and forestry practices, market pressure for responsible 
sourcing of agribusiness commodities (concurrent with responsible 
lending practices), adequate environmental impact mitigation of new 
infrastructure, strengthening of local environmental governance 
processes, and wider application of satellite-based forest cover 
monitoring and land use planning tools will be essential to balance 
economic benefits from expanded commodity production with protection 
of Amazon biodiversity, vital ecosystem services, and vulnerable 
rural communities whose livelihoods depend on access to natural 
resources on one of the world's last forest frontiers.  END 
COMMENT. 
 
SOBEL