Transcript: How China’s Demand for Soybeans is Fueling the Destruction of the Amazon Rainforest

Mark Goldberg: (03:59)
Okay, good. So just to kick off, can you describe the road BR-163 its geography but also its broader significance.

Melissa Chan: (04:09)
Yeah, it was very interesting. Our arrival to driving along BR-163 was very timely because when we got there, they were just putting the finishing touches on paving this road. It’s actually been around for years and years as parts of it really a muddy road. So anytime there was an Amazon rain the road would just get muddy and trucks carrying soy northwards to the ports would get stuck there. So it was just a really unworkable road. And as soon as Bolsonaro came in as president, that was one of the things he did is he sent in the military to finish paving that road and something that has taken years and years of waiting, he managed to do in a few months. So we saw soldiers along the highway finishing up this road. And it’s interesting because it cuts from the South through Mato Grosso, the state of Mato Grosso. And if you keep going North, it cuts through the state of Para. And it ends on a tributary of the Amazon River, and it is the primary artery for moving soy from Mato Grosso northwards if that’s the option they want to take, and export that soy onto Europe, possibly China from the Amazon river.

Mark Goldberg: (05:29)
And why soy? Why is soy is such an important export commodity for Brazil and for this region in particular?

Melissa Chan: (05:40)
Soy is important because of China. So we have to look at it from the point of the Chinese. first of all, pork is a very popular meat in China. It is a staple meat. And to the point that there is a pork, a strategic pork reserve, in the same way, that the United States has a strategic petroleum reserve,

Mark Goldberg: (06:01)
I did not realize that. That was absolutely fascinating to me.

Melissa Chan: (06:04)
Yeah. Yeah. And half of the world’s pigs reside in China. Now very recently there was something called the swine flu. So poor China’s had to deal with the human Coronavirus. But before that, they had the swine flu that actually got killed a lot of pigs. but without that flu, which is, something kind of a freakish incident. half of the world’s pigs are in China and those pigs are fed on soy meal. which means that China needs to either grow a lot of soy or import a lot of soy. And this is another interesting thing. I mean obviously we went to the Amazon to look at it as an environmental story, but there are several things going on. China has a really hard time growing soy if it wanted to.

Melissa Chan: (06:53)
And it can’t because of the massive amounts of water that is required for soybeans. So it has to import. China just doesn’t have the water for it. So every soybean that comes to China, you kind of have to look at the little round bean and realize that it’s an import, not just of the soybean, but also kind of like a water import. basically getting Brazil or the United States to use their water to grow the soy and then bring it into China. And China depends a lot on soy from Brazil. Last year, 70 to 80% of all soy that China imported came from Brazil. This had a lot of, there were a lot of reasons for it, but of course, there was a US-China trade war which meant that China had to look elsewhere, and leaned in on Brazil more than they normally do buy from American farmers. so those are some of the reasons why it’s really important. there’s, of course, a growing middle class in China. They are consuming more meat. they expect to eat a lot of pork. beef and chicken come, you know, they’re growing beef particular is a growing sort of an industry and in terms of sales, but really it is all about the pork in China. And so that is why the Chinese need soy.

Mark Goldberg: (08:15)
It’s just interesting to me because you know, most of the commentary and the news that I’ve read about deforestation of the Amazon, particularly this summer and earlier last year when the fires raging in the Amazon, was for cattle cultivation and cattle grazing. And that’s why I was really interested to learn about that soy connection with China.

Melissa Chan: (08:42)
Well, it’s tricky, right? So technically, cattle is the biggest driver of deforestation in Brazil that is still preeminent. And I should add to that the number one place they, the Brazilians export beef to is China as well. China combined with Hong Kong, essentially it’s all headed to that region. And but the reason why the figures can be a little misleading is that the soy fields are growing every year in this part of the Amazon basin. And the reason is, there’s a, there’s a, there’s a law or agreement called a soy moratorium that Greenpeace initiated with the Brazilian government and agribusinesses a few years back and they all agreed they wouldn’t, the agribusinesses agreed they wouldn’t buy soy from land that had been deforested. Well, one way to, if you want to cheat the system and work the system that if you’re a Brazilian farmer or Brazilian, you know, prospect, you’re in that region, you would raise the forest and then you’d bring cattle to pass your pasture them out for a few rounds, a few seasons. And that has just become, that is no longer a jungle, that is a pasture for cattle. And then you convert that after a few rounds to a soy field. Suddenly that soy field technically did not break the Soy Moratorium. So that is

Mark Goldberg: (10:11)
That’s a loophole in the Soy Moratorium.

Melissa Chan: (10:15)
And so that’s how we argue in our piece that China is a contributor to the deforestation, not directly but because of its huge appetite for soy, there is incentive for people who want to make money in Brazil to, to do things like what they’re doing with this cattle and soy business.

Mark Goldberg: (10:34)
So as you explain in your piece, you know, paving that BR-163 road is a sure way to get the soy from Mato Grosso to the ports. but you have done reporting around a proposed rail line that would take this process into a much more efficient space and potentially exacerbate this kind of deforestation crisis. So can you just describe what is the grain train and a, was it called the Ferrograo in Portuguese?

Melissa Chan: (11:09)
Yes, it’s the Ferrograo. So, the reason why we went along that highway is that the plan would be to build the railway up that and it would parallel the highway. so we wanted to sort of see what was already there and what could potentially be developed in that region. And this is something that the Brazilians, the local Brazilians, the farmers, have wanted for many, many years. They never had the political capital or the financial capital to make it happen. but now you have Bolsonaro who, was strongly supported in this region who’ve come to power and he’s going to try to deliver. His government has said that they are going to open up the bidding process this year for this train, they hope to build it in five to seven years. Maybe that’s a little ambitious, but within the next decade and the financing has finally come through.

Melissa Chan: (12:02)
Now the Brazilian government that we spoke to, government officials, they wouldn’t go into the details. What they said is they assured us that the financing was there. And we believe, from inference from comments from officials that, there will be Chinese investment and possibly Saudi Arabian investment to finance the project. And, the other connection to China is of course, not just the financing, but the construction companies interested in bidding include, at least that we could track down, three companies interested in building this railway. And if you build this railway, suddenly you can transport more soy quickly and export it quickly. And that has been the biggest, you know, Mark, that has been the biggest, barrier for soy in Brazil because the actual soybean that the Brazilians produce is higher quality than the one in the United States.

Melissa Chan: (13:01)
But America wins on infrastructure. So they can guarantee to deliver soy to China by a certain date because infrastructure works smoothly in the United States. That has been the biggest barrier for Brazilians is that, you know, that that previous, highway before it was paved was muddy, right? I mean, there’d be traffic jams, you couldn’t guarantee a shipment. And that’s why the reliability of the Americans was something that the Chinese found favorable. Now they’re Americans have shown themselves not to be reliable anymore because of the trade war. That was a nasty surprise for the Chinese. And I think despite the fact that they have a phase one agreement that includes the purchase of soy for, from the Americans to the Chinese, I think the Chinese from a political perspective will not trust the Americans moving forward longterm. I think they’re looking at an eye in South America and Brazil especially to buy their soy.

Mark Goldberg: (13:55)
Would the Ferrograo, the grain train, be potentially the largest example or the largest iteration of the Belt and Road Initiative in Latin America?

Melissa Chan: (14:07)
That, I don’t know. I mean there’s been a few other big BRI designated projects including a hydroelectric dam in Brazil for example, and also, involvement in, developing, an electrical grid elsewhere in Brazil that the Chinese have been involved in. But absolutely it would be a huge project. I think the price tag on Ferrograo is I think about 3 billion US dollars. So, that’s a pretty big project. And it would, of course also the Belt and Road Initiative, not just being a size issue, it’s about security. It’s about national security for the Chinese. and so if you can assure a steady supply of soy from, by helping build this railway, not only would a Chinese construction company potentially benefit by winning the bid to build a railway and the fact that a Chinese bank might be involved in investing in the project the Chinese from a food security as national security standpoint will see this as a positive because then they can have assurance that there is going to be soy from Brazil that can move to China smoothly. So it all kind of works out and aligns in terms of looking at it from a BRI perspective in so many ways,

Mark Goldberg: (15:26)
What do environmental assessments look like in terms of should this railway be built? You know, setting aside the destruction that’s caused by creating the railway and, and I’d like to talk to you about the relationship that that proposed rail line has with indigenous lands. setting that aside for now. so say this railway is built and there is a more efficient way of getting soy and other products from the Amazon to the Chinese market, how do people expect that to contribute to the ongoing deforestation of the Amazon?

Melissa Chan: (16:01)
Well, then there’s all the more incentive to open up more territory to grow more soy, especially when the cost of transport will fall as a result of having a railway as it over trucks. So that’s, that’s one reason. I mean, they want to build and they want to grow more soy. When we talk to, the agribusiness folks, the farmers, that’s what they want to develop this region. And they don’t have any qualms about deforesting. So that’s the main thing that drives them.

Mark Goldberg: (16:35)
So I guess what I’m so fascinated about your reporting about what this story more broadly is just, it seems to touch on so many different global trends all in one story. I mean, you have the deforestation of the Amazon fueled by the needs and desires of a growing Chinese middle class and you know, all tied up again with the Belt and Road Initiative and the geopolitical implications of that. I mean, it just seems like a, almost like a perfect story to explain this current moment in geopolitics.

Melissa Chan: (17:14)
We definitely thought so, which is why we were so keen ongoing. And, and I think it was I’m very happy that the Pulitzer Center was able to support us on it. You’re absolutely right. You can talk about it from a climate change perspective deforestation, food security, national security, China, and its impact beyond its borders, China and Brazil, China and the United States. There were so many dynamics going on. I mean, I’m glad that we have a chance to talk about it because in the context of one article, you know, we couldn’t cover it all. even though we tried to cover as much ground as possible. And of course, yes, you have the local environmentalist, you have the indigenous groups and we met with some leaders of indigenous tribes there. And so you have this, you know, there’s a lot of development like in China too, like that in the cities. I saw a lot of construction at a level that I hadn’t seen since I’ve been in China. So there’s that going on. And also this whole concept of a frontier territory, it really did have a wild west feel to it. And so you can create these parallels to 19th century America as well.

Mark Goldberg: (18:26)
One, I think, really fascinating quote probably to me, one of the most interesting parts of, of your piece was that indigenous leader who you interviewed, whose name is escaping me right now, but who said that, the only regress he see, the potential for redress he sees to stop this rail line from cutting through forests in his indigenous homeland is not the Bolsonaro government, but the Chinese.

Melissa Chan: (18:55)
Yeah, I mean Doto tuck, Akira is a smooth operator. He’s been fighting this fight for a very long time. So I think that of course, he spent his entire adult life thinking about this and seeing how he can, fight on behalf of his people. I think he was very shrewd in understanding that, he wasn’t going to get any help from the Bolsonaro administration and certainly not from agribusinesses. And so, you know, you want to make that play to China because he’s very aware of the other thing about China, which is that it’s a signatory to the Paris agreement and that the ministry of environment if you look at the Chinese ministry of environment has done a lot in terms of trying to commit to combating climate change. So China is an authoritarian state, but I think it’s easy to think of it as a monolith. But even within an authoritarian system, you have different departments and ministries with very different goals. And this is a situation where you have food security running counter to the national environmental strategy. And so if the indigenous tribes can tap into the environmental strategy and sort of appeal to the Chinese from that perspective, that’s probably their only hope.

Mark Goldberg: (20:12)
It’s just interesting in terms of the Paris agreement, how China is a signatory to it, one of the real leaders behind it coming into existence yet they’re sort of outsourcing their environmental destruction and degradation to Brazil.

Melissa Chan: (20:27)
Yeah. And to be fair, I mean, I don’t want to do the what about ism, but I do think it’s important to bring up, right, it China is doing this now, but in an earlier period and still the United States was a country that did it to China in terms of exporting manufacturing essentially to China, where the manufacturing caused so much pollution that was then blamed on China, but the driver was American consumerism. So you see this relationship between so many different countries, right? It’s not just done by China to Brazil, where there’s deforestation, but you see it happen with the United States to China and so on and so forth. And that’s something to keep in mind.

Mark Goldberg: (21:12)
So you’ve done a lot of reporting around the world and you’ve followed this story around the world. Of the impact of China’s growing middle class on world affairs and geopolitics and the politics of other countries. Did anything surprise you about what you found or what you reported from in Brazil?

Melissa Chan: (21:35)
That’s a good question.

Mark Goldberg: (21:40)
Or I mean, it could, I mean the answer could be no, it just sort of fits a theme, right?

Melissa Chan: (21:44)
It does kind of fit a theme. I think what surprised me was not the China angle, but the wild West field, which I had been warned about. As an American, I could see it and that was my reference point. there were so many towns we went through. There was one in particular where I felt, you know, that in Western movies when you, when you’re the newcomer and you walk into a new town and you go into the saloon, sit down, everyone notices you, and by the end of the hour, everybody in town knows there’s a stranger in town. There were places like that and it felt lawless. And it also felt as if we rocked into, you know, a town that everybody soon knew that we were there. So there was definitely a feeling of a lack of safety. We were journalists asking questions and they don’t like journalists and they don’t like people who are concerned about the environment.

Melissa Chan: (22:45)
But on another level in terms of going on with the same analogy was, is the fact that it is lawless, that the federal government does have laws in place to prevent deforestation and illegal logging. but this is a place so far away that enforcement is really hard. And that is something that of course you see similarly in the United States, in the wild West. And to continue with that theme. You know, we were you have the indigenous groups as you had the indigenous groups in the United States fighting with the people of the frontier who view what they do with this kind of manifest destiny of building and developing and forging and creating this new Western region, which is what’s happening in Brazil in the 21st century.

Mark Goldberg: (23:39)
Finally, let me sort of phrase it this way. So just to conclude the Ferrograo the grain train that your article focuses on, may or may not be built and if it is built, it very well could increase in catalyze and spur on the destruction and deforestation of the Amazon. In the next sort of year or two. Are there any sort of moments that might suggest to you whether or not this rail line will actually be built?

Melissa Chan: (24:16)
I think the thing to keep an eye on is that bidding process. And if they make an announcement, sometime this year, I think that’ll be key. If they do make an announcement, then I think we will really see movement. I think the money is definitely there. They’re very confident about this and the people in that region who have benefited and profited from this farming and logging and cattle ranching, they’re keen. So the stars are aligned to make this finally happen and we just have to see that bidding process. I think that’s the main thing.

Mark Goldberg: (24:51)
Well, thank you. Thank you so much for your time.

Thank you so much, Mark.