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Can cattle ranchers and soy farmers save the Amazon? An Interview with John Cain Carter: Rhett A Butler, mongabay.com June 7, 2007 The key to making conservation successful is making it profitable. John Carter may hold that key.
The reasons for land-clearing in the Amazon are compelling: cheap land, low labor costs, and booming demand for commodities driven by a surging China and growing interest in biofuels. These factors have helped Brazil become an agricultural superpower – the world's largest exporter of beef, cotton, and sugar, among other products – in less than a generation. Amazon landowners have seen their land values double every 4-5 years in areas that just a decade ago were pristine rainforests. The market is driving deforestation.
While deforestation rates in the Amazon have accelerated, the problem is not a lack of laws, but rather a legal system where enforcement is so slow and so corrupt that it renders the laws effectively useless. On paper, cattle ranching in the Amazon may be the most restricted in the world, with landowners required to keep 80 percent of their land forested – a limitation no rancher in Texas faces. Carter wants to see farmers in Brazil benefit in following the law, by turning this restriction into a marketing advantage. However in order to do so, Amazon producers have to ensure that consumers ( i.e., buyers of commodities like McDonalds, Wal-Mart, and Cargill) can confidently say that agricultural products are produced legally and even more sustainably than stipulated by the law. The incentive for producers is market access: Aliança da Terra helps Brazilian farmers and ranchers get the best price for their products, but only if they follow the rules. While producers get higher prices for their goods, buyers like Burger King and Archer-Daniels Midland can say they are using legally and responsibly produced beef. Meanwhile more rainforest is left standing, ecosystem services preserved, and biodiversity conserved. Everybody wins.
What is most remarkable about Aliança's system is that it has the potential to be applied to any commodity anywhere in the world. That means palm oil in Borneo could be certified just as easily as sugar cane in Brazil or sheep in New Zealand. By addressing the supply chain, tracing agricultural products back to the specific fields where they were produced, the system offers perhaps the best market-based solution to combating deforestation. Combining these mechanisms with large-scale land conservation and scientific research offers what may be the best hope for saving the Amazon. In a June interview with mongabay.com Carter explains his experiences in Brazil and his approach to saving Earth's largest and most important rainforest. INTERVIEW WITH JOHN CAIN CARTER OF ALIANÇA DA TERRA Mongabay: You were born in Texas, so how did you come to be involved in agriculture in the heart of Brazil? How long have you been ranching in South America?
Mongabay: So it sounds like for an American farmer you were ahead of the curve in terms of seeing the potential for agriculture in Brazil. Carter: I suppose you could say that. When we moved down here there were no Americans here. It was, and in many ways still is, very much a frontier area. The interest in agriculture here has really just taken off in the last 3-4 years and there were no Americans here until very recently. Mongabay: Do you think growing interest in biofuels and rising demand from China are driving this change?
Mongabay: Can you describe the sort of environment where you have your ranch? Is it former rainforest, surrounded by rainforest, or cerrado grassland habitat? Carter: When I first came to the ranch is was 60 percent forest and 40 percent pasture. Most of the forest was secondary forest that had been previously deforested but had regrown. The ranch is located in the southeast Amazon forest--the so-called transition forest in northeastern Mato Grosso. Most of that region was forest but I've witnessed the vast majority of that area cleared over the past 10 years. It's been very fast-paced progress with the frontier rapidly moving across the Amazon. Just a short time ago we had wilderness, but now we have Cargill at our back door. Mongabay: What about the laws that require ranchers to keep a portion of their land forested? Has this not slowed deforestation?
The fact is, most people never respected the 50 percent requirement in the first place. For the most part, they just classified rainforest as cerrado so they could clear more land. The problem stems a system that is essentially a corrupt, black market. The agencies that control the permits and law enforcement are on the take, so it basically is just a bribery process. While this has changed a little bit in the past couple years, there's still a lot of funny business. For example, the big story in the paper yesterday was a sting where they busted a whole ring of illegal loggers. A bunch of these guys worked for the environmental protected agency and the parks and wildlife agencies.
Mongabay: Sounds like a difficult situation. What kind of land appreciation are we talking here?
Forest land is by far the cheapest but with all the pressure on the Amazon today. people who have a lot of exposure really tend to shy away from forest, because they don't want to be caught in the spotlight and put in the paper. If they stay within the law, they are fine, but most people don't do that. Most multinational corporations today wouldn't touch forest land with a 10-foot pole due to the negative press. Most people are looking for cerrado lands that have already been cleared so they don't have to do the crime. That leaves forest demolition mostly to investors who don't really care about public opinion. A lot of time they are dealing with land that has no title or title problems or land invaders. That's where the real opportunity comes. They go in there, get it for cheap, fix it up, and try to get their title in order before they sell for a hefty return. Mongabay: Is there any record? Is there a way to prove forest was there a year ago? Carter: Yes, they can prove you tore down forest in the past two weeks using satellite imagery or the state monitoring system but the problem is the corruption and payoffs that ruin the system. Fine are rarely collected, but bribes are common. If they wanted to, they could enforce the law immediately. Actually, prosecution is happening more these days. I think international pressure is a factor. Brazil's satellite monitoring system is one of the best in the world. If needed, you can tell if someone deforested their land 15 years ago. For my old property, I can get annual satellite imagery from 1979 to the present. Mongabay: Why did you get involved? Why do you care about the sustainability of ranching in the Amazon? Carter: My first visit here was in 1993. My wife's dad had a ranch and was helping him look for some more land. I drove up with him to a small town on the edge to the cerrado and forest. The dirt road took us through the forest of the southern Amazon. On the way, I saw a Xavante Indian walking naked along the road with a bow and arrow in his hand and a black jaguar in the highway. I knew this is where I want to be so I moved here.
I saw this on a day-to-day basis as I flew. I've now flown probably somewhere between 700,000 and 800,000 kilometers in the state and seen what seems like the whole thing deforested in 12 years. On the ground it can be even worse. Our neighbor one time tore down 12,000 acres of forest in three months. We couldn't see for about 4 weeks when he burned the residual--the smoke was so thick. During the burning season in the Amazon it's like this all over. You can't describe it unless you've been there and seen it. You can't see the sun at mid day and have to drive with your headlights on. It was terrible. It was clear that environmental groups hadn't had much of an effect in slowing deforestation. They've been effective at making the world aware of the problem but they have never come up with a real solution to the problem. The slowing of deforestation the past couple years was not due to their efforts as the minister of the environment likes to claim, it was the market. People went broke and no one had money to invest in deforesting. Landowners only clear forest when they have extra money in their account--they do it out of their own cash flow and private equity, they don't use loans.
My wife and I decided that amongst other things, including all the violence in the region which, on occasion, impacted us personally, we weren't going to stay in the area unless something was done to change it. We could not continue to sit and witness this rape without at least trying something. So that's how we started the idea. We went on all the wrong trails and all the naive roads that people seem to take. We banged our heads against the wall and realized there was no way to stop it--the momentum is just too great. The one thing we could do was try to minimize the collateral damage by creating incentives for people to at least maintain forest in riparian zones and as corridors between properties. If we got that done, we would accomplish more than anyone had done in the whole history of the Amazon. So that's where we concentrated our efforts. We lowered the bar enough so that we knew landowners would jump if they had a small incentive. The carrot is market acceptance for their products. We at least 30 to 40 percent of the forest in the Xingu region could maintained in the a pilot project. We'd then aim to expand the program to frontier regions. Mongabay: How does Aliança da Terra work? Carter: Aliança da Terra is based on the concept of market acceptance for sustainable agricultural production in the Brazilian Amazon. We're presently focused on beef, which is the largest driver of deforestation in the Amazon, though we're also working with other products including soy. Aliança da Terra is doing the necessary field work first to prepare for an all out attack on the markets, demanding recognition of the ecosystem services being provided by private land owners through market access. This gives a tangible incentive to farmers and ranchers who farm in a responsible manner and obey good land stewardship practices as well as the forest code and excludes those who don't. Our reasoning is that this land is going to be deforested regardless of the law or public sentiment if some immediate, tangible economic incentives are not installed asap. The soy boycott by Greenpeace was a sign of how globalization can touch conservation. It helped to prep the battlefield for us, showing that the world is starting to pay attention to how food stuffs are produced. But, the flip side to that is that the world needs to work with producers as well as make adjustments along the supply chain on how margins are distributed. Now it is not a fair and equitable distribution, more should trickle down to the producer/land owner as he is the one with the conservation burden/ecosystem service on his back. This needs to be itemized on the balance sheet!
We've built an accrediting mechanism that allows consumers to use their purchasing power to select between environmentally responsible producers and environmentally irresponsible producers. By doing this, we've effectively created an incentive for producers here to do the right thing. Mongabay: Does this mean you are seeing "pull" from consumers who are asking for certified products? Carter: That's a tricky question. With mounting worries about global warming reflected in Al Gore's movie, there's no doubt the world is more concerned principally with what's happening in the Amazon. The international community sees where we are going to be in 100 years, and it's not a pretty picture. In even the best case scenario, we're still kind of in trouble, while under the worst case, we're toast. In the best case scenario we still need to take action. This outlook gives us enormous room to work and a wide range of options. Environmental groups and the international community have basically prepped the battlefield for us, so the world is prepared for what we're creating. It is already looking for solutions like this.
Under our system, the only benefit a producer will get is market access, but by gaining access to the European, American, and other foreign markets, local producers will benefit significantly. Instead of having prices based on the Brazilian Bolsa, they will be getting Chicago mercantile rates which are inherently higher, less freight and trade tariffs. The only way producers have this access is by following the rules. We are essentially creating a hurdle that's effective for conservation and low enough to be attractive, but that allows you to jump to that higher price and even get bargaining power with slaughter plants and the big grain brokers like Cargill, Bungee, and ADM [Archer Daniels Midland]. Currently the big guys have the leverage. The real reward is going to come from money that already exists in the system but is currently staying in the pockets of the big guys. We're trying to reach critical mass of volume that we have market leverage. We are absolutely convinced that once this happens, and you have two products, one with credibility and transparency and the other with a questionable origin, people will choose the option with legitimacy. An added benefit for producers is that our system reduces the risk of a moratorium on Brazilian products. While the EU may slap a beef or soybean on Brazilian agriculture, certified products would stand a better chance of escaping sanctions. Mongabay: So you are offering a path to markets? Carter: Exactly. We offer a ticket to the market. We also look for other financial incentives for producers that participate. For instance, cheap money through loans used to reforest their riparian zones, lower interest rates, and financing for production. Most of the big investment banks are looking for prerequisites before they lend money and it appears some of them will be adopting our policies. We're trying to facilitate two bottlenecks in the beef industry: when you want to get money and when you try to sell. We're not saying you're going to get paid more for your product, but you'll get a pathway to the market, which in and of itself, is more lucrative because they are going to be getting prices based on the Chicago Mercantile rather than the local market.
Mongabay: So ranchers are enthusiastic about the project because of the legitimacy and financial inventive? That is, you're not dragging them on board kicking and screaming? Carter: To be honest, we were a little hesitant at the start, thinking that we were going to have trouble signing them up. We feared negative feedback, but from the start people were very enthusiastic. They told us, "This is exactly what we need. We're tired of being branded as bandits." Now we've gotten a huge resounding applause from the sector. Being a landowner here is complicated. When you live in this region, you see the corruption. People involved in the take are supposed to be protecting the forest so it's no wonder that you get the state of civil disobedience among landowners. There's no real honest leadership to set an example. So when we come in and offer them a path of least resistance to the right thing as well as hanging market incentives, landowners jump at it.
We're trying to turn this forest reserve law from a negative into a positive, or make lemonade out of lemons, so to speak. People think farmers in the Amazon are bandits so we're trying to show there are good people who are trying to make a difference and reduce their impact. Working with some magazines to make it more meaningful, we're going to have a landowners award ceremony every year where we recognize the best land steward. No one's every patted these guys on the back or even shown them how to do the right thing. All they've told them is no. The officials fine them and extort them, often at the same time. Meanwhile the whole production system is opaque. For example, the vast majority of beef that's produced in Mato Grosso state is for export but it's hard to pinpoint the origin of the beef. Slaughter plants do a good job of hiding it. We're turning the system on its head, adding transparency and credibility to turn it into a worldwide example of good land stewardship. Producers will be rewarded through market acceptance for taking the extra steps to do the right thing. They'll be able to take their product to McDonalds, Burger King, and other firms worried about reputations. All the big multinationals want credibility these days in regards to the environment and sustainability. Mongabay: So you're really addressing the supply chain for these large companies? Carter: We're confident that we can become providers for the world. McDonald's regularly gets blasted in the press for their links to environmental damage. Mostly recently Greenpeace traced Amazon soy all the way to Holland where it was used to feed chickens that went into chicken McNuggets. When that story broke, it was huge news and sparked the moratorium on Amazon soy by the big crushers. It has forced producers to be accountable for the sources of their soy to the most distant part of the supply chain--the properties where the soy is produced. Anything coming from deforested land after a certain date is no longer acceptable.
This is why the process has taken a long time--we're attacking a commodity. By attacking a commodity, we're changing the way production is done. Hopefully it will change how its done worldwide for the future. We hope that someday a rancher in Texas and a sheep farmer in Australia will be bound by the same criteria for land stewardship. In the end, what started under the worst possible conditions in the heart of the Amazon, could be the criteria for producers worldwide. That's our dream. That's also what the World Bank wants to see, as do other financial institutions. I think that's why we've won support from some many influential institutions, like Woods Hole. This can have an enormous impact across the globe. Mongabay: So you are anticipating a moratorium on beef? Carter: Yes, it's the logical next step after soy, especially since two-thirds of deforestation is for cattle pasture. I think that in some ways a moratorium is really a good thing. I've seen the whole go up in smoke and I believe that if you can't beat them, join them, and then try to make change from within the system. You have to work with the landowners, give them incentives or otherwise they are never going to do anything. We're trying to be proactive.
But I think we can take it beyond the Amazon. I've been contacted by some associations in the United States, the USDA, and academia about the system. I believe we could see it adopted in as soon as 5 years in the U.S. Among the groups showing the most interest are financial institutions, which are looking for greater accountability. They are developing prerequisites for loans so that no matter where a producer is located--be it a producer of soybeans in Brazil or a sheep farmer in New Zealand--there will be a universal set of criteria so that we can even the playing field worldwide. The World Bank is looking for something that can be duplicated on a global scale, which is exactly what we are trying to create. The certification system is flexible to allow for differences in state or national forest code systems, but requires the same application of general land stewardship practices. This allows the system to work for any country across the world for virtually any agricultural product. For example, if you look at my home state of Texas where you have a lot of environmental degradation, ranchers are presently selling beef to Japan without any restrictions whatsoever. By comparison, a ranch in Mato Grosso is required to be 50 percent forests, a huge conservation burden for which Brazilian landowners see no compensation. This forest produces X amount of carbon sequestration service per year, an ecosystem service I'm providing but getting no benefit from it other than market access, whereas a person in East Texas who cleared his Piney Woods forest down to the edge of the Brazos River is not penalized for it. That creates an uneven playing field that I think goes back in the face of people in the States and Europe who threaten to boycott Brazilian products. In America you have all sorts of agricultural subsidies, in Brazil there are no subsidies and you have this added conservation burden on your shoulders. There's nowhere else in the world with such a restrictive forest code as Brazil has. But it's the only reason you still have some forest here today -- otherwise it would all have been clear cut. Mongabay: There are a number of certification schemes with varying degrees of accountability and effectiveness around the world? How does yours differentiate itself in this market?
Finally we are also working on getting the buy-ins from all the other nonprofits in the region working on these issues. There's a lot of interest because the concept is win-win and scalable on a global level for virtually any product. We even have the development banks wanting to be a part of it. Everyone agrees something has to be done. Mongabay: I spoke with Dr. Dan Nepstad of the Woods Hole Research Center last week. He's played an important role in this process, right? Carter: Dan is the backbone of all of this. From my perspective as a layman, he has to be one of the most important figures in the Amazon today. He's combined the environmental movement with sound science and has had more of an impact than just about anyone I know and really gotten little credit for it. He's very humble but has done an absolutely phenomenal job.
The Brazilian government, international community, and environmentalists have taken the wrong approach here. We're now working to convince the world that they have to work with people who own the forest. Dan truly bought that idea and saw the potential and then sold this it to the power brokers and deal makers. He sold it to the big nonprofits that would pretty much be intimidated by this kind of idea or feel threatened by it. Now through Dan we've been able to lobby these groups and have them participate as allies to create something that's bigger than all of us.
Dan has penetration internationally too. He knows very key individuals other than environmentalists, including Michael Jenkins who is the head of Forest Trends which is tied in with the Katoomba group, a think tank of business leaders from different industries who look for market solutions, including ecosystem services and carbon trading. So Dan's has a deep network of contacts among international industry, governments, scientists, and environmentalists while I have penetration here with the landowners--that's why we joined hands. He knew we had something special that could really change things for the better in the Amazon. It's been a tough process but it looks like its starting to work. The pendulum is swinging back in the other direction. I'm pretty conservative, but in 5 years I think we are going to look back and say it worked. Companies like Wal-Mart, Burger King, McDonalds, and the largest grocery store chain in Brazil Pao de Acucar are all starting to sniff the winds and it looks like they are going to start doing something like we're doing. A European Union certifying company, Eurepgap, that certifies properties producing commodities for export to the European Union is in contact with us trying to establish environmental criteria for agricultural products from the Amazon for the first time. What we're building could become a prerequisite for export to Europe and possibly for loans from the World Bank, IFC, and commercial banks. If this turns out to be the case then this will really be a success. Whatever forest remains today in this region is the result of everyone involved in this process -- otherwise it wouldn't be there. A lot of this is coming from a pilot's perspective from seeing the whole country, most of which was at one time forested. All of Sao Paulo and Parana state, the southern states were Atlantic rainforest but now there's 3 percent left. There's no forest on the streams -- they are denuded of riparian forest cover and there's no reason to think the Amazon wouldn't see thing same thing. It will be the same thing in 50 years if something isn't done -- it doesn't matter what people say. It's an overwhelming firestorm that you just can't fight the methods they are using today. You have to bring in economics or else you have no chance. Mongabay: Are you making any efforts to recoup the value of carbon credits, for example seek some kind of compensation for that service? Carter: Today there are no are carbon sequestration credit programs in the Amazon using native forest. The only carbon credits paid are for hydroelectric dams and reforestation projects using eucalyptus, pine or rubber trees. There's zero for native forest. However we recognize that this may change in the future so we're using our project as a pilot. We've selected 10 ranches across the region and are working with scientists to measure the growth rates of trees in each different region to see how much carbon they are sequestering by reforesting riparian zones. One of our board members is Michael Jenkins of Forest Trends, a group that is at the cutting edge of payments for ecosystem services. When binding carbon emissions limits come into effect we'll be ready. For now all this is pretty much pie-in-the-sky, but in ten years I think this will be tangible. The producers ask about it but we tell them not to hope for that because it's not going to happen for sometime. Down the line it will be a bonus for them. We're building the system to be worthwhile even without carbon credits.
There are any number of side projects involving biodiversity conservation in the Amazon. For example, I have a side project with Amazonian river turtles. We're trying to rehabilitate them after overhunting. We have teams that go out to collect the eggs after they are laid in June-August. We raise them until they are about 2 months old which increases their survival rate exponentially. We're working with the federal government on this project. Anyway, in this end these are powerful tools that will let landowner know what their properties hold. These maps will unlock the value of their land for other than cattle. Mongabay: Could you give an example of a corrective action you would recommend for a landowner? Carter: We concentrate on four primary items. The first is riparian zones along waterways and swamps. By law those areas are supposed to maintain 50 meters (160 feet) of forest cover on each side. Few people have done this. Instead pretty much all the forest is torn down leaving creeks and streams as muddy drainage ditches. To qualify for certification, landowners need to let these areas recover naturally or reforest them. Similarly there are legal requirements to maintain forest on 80 percent of your land. If you have a deficiency of forest on your property then you have to sign a legal document that says you will come into compliance over a certain timeline or that you will compensate in another area in the same watershed. Our property for instance, lacked around 1200 hectares of forest when we moved to it, so I let a portion of our property come back naturally to meet the forest code. I did it on my own -- there was no pressure from the government. Coming from the States, I thought I had to come into compliance with the law. Turns out that I was among the 5 percent or so in the state who is actually in compliance.. Another corrective action is reforested hills and cliffs to control erosion. This is probably the second most important work after riparian zones since all the eroded soil ends up in streams where it changes the pH, the turbidity, and the fisheries. The third area is farming methods. We encourage the use of contours, no-till, terracing, and other soil conservation methods.
Since this is such a critical problem, we hit really hard on fire control. Using satellite imagery, we show the rancher over a period of 5 years how his ranch burned, including how many focal point of fire he had on his property during that time period. We help him create a fire plan, including where he should have fire guards and making sure that he has fire-fighting equipment and communication channels with his neighbors. Fire is a big concern for Dan Nepstad, IPAM and Woods Hole--every year there are 30,000-40,000 fires in Mato Grosso state alone. The fires burn for 2-3 months--no one puts them out. They burn through virgin forest and the smoke is awful. As a pilot, it is horrendous. You put your life at risk whenever you fly in those conditions. The more people burn and deforest, the drier the region becomes. The relative humidity is reduced so that forest that once wouldn't burn now becomes flammable on a yearly basis. Woods Hole thinks it may be approaching the point of no return where you could have much of the Amazon simply go up in smoke. That's why Dan puts all this emphasis on fire studies in the state. Aliança da Terra is quite aggressive on this front. Soon we're going to have a system for sending out flyers and email blasts to help people manage their land to reduce this risk. Right now most people don't take the proper measures because one they are lazy or don't know how. The state of corruption doesn't give them much reason to act. In fact, some landowners are afraid to go to the government because they know they will have to pay bribes to get permits. That's where Aliança comes in. By joining our system, we cut out that bribery process. It's safety in numbers since we have so many landowners involved in the network. The corrupt crowd know not to ask anybody in our group for bribes because they they'll be blasted in the press, lose their jobs, and be humiliated. By ensuring transparency we have people lining up to ask for permits to do things the right way in a region that until now was essentially lawless. However, it must be said that the Brazilian Federal Police, Gov Maggi, and the state wildlife agency head, Marcos Machado, have done a great job combatting the old boy's network, drastically reducing the corruption. So much so that we consider the state Environmental Secretariat (SEMA) a huge ally and we are working hand in hand with them as partners. Another aspect we focus on is the continuity between forest reserves. Though the law doesn't require you to have continuity--you can have a block of forest in the middle of your land that has no value ecologically and still be in compliance--it is crucial for conserving biodiversity and ecological services. So we're trying to encourage people to leave corridors between ranches. We've just launched a pilot program that will strive to maintain 150 miles of corridor between the Xingu and Araguaia watersheds. We have all the landowners there, including Indians, working to make this one big swathe of forest that will serve as the last corridor between the two watersheds. Deforestation has destroyed the rest of the forest. Mongabay: Once a landowner signs on, how does it work? How do you monitor ranches to be sure they are in compliance?
Google has shown an interest in the project. It's still in the early stages but at some point people may be able to use Google Earth to zoom in on ranches. Our properties would be highlighted on their map. Mongabay: What can people here in the United States do to help your efforts? You are a Brazilian organization but do you have a U.S. entity? Carter: We started as the Brazilian Land Trust, a 501(3)c nonprofit in the United States. From that we evolved to a Brazilian organization because we wanted to nationalize this and make it a Brazilian effort since there's lots on animosity towards international nonprofits here. You kind of shoot yourself in the foot by being one. I'm one of two Americans on the board, everybody else in Brazilian. We're based on donations and we run on a very strict budget with almost no overhead. Most of the money goes straight to the field. I wear myself thin out in the field and don't have much time to fund raise, so we're always a day late and a dollar short. I do this pro-bono. Anyway we are actively looking for donations. Americans can do so through our web site. We still have a 501(3)c entity so any donations are tax-deductible.
A year from now our product--meat from our certified slaughterhouse--will be branded in Europe. If the U.S. opens up its market to fresh beef from Brazil, then we will have it in grocery stores there as well. All packaging will have our seal. This system. which will allow consumers to trace the product back to the property where it was produced, will be the first of its kind on this scale. Buyers will be able to go online to view the history of the property in a series of satellite images up until the present. They'll be able to read the management plan, see the corrective actions taken by landowners, and be confident that the beef they're buying is coming from a certified sustainable source. It's being created as the new model for the world to adopt.
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