EDUCATIONAL OUTREACH AND ECONOMIC FAMILIARIZATION WITHIN

UNCLAS SECTION 01 OF 02 SAO PAULO 000918

SIPDIS

SIPDIS

STATE FOR CA/VO/F/P AND CA/FPP

TAGS: CVIS EAGR EINV ETRD ECON BR
SUBJECT: EDUCATIONAL OUTREACH AND ECONOMIC FAMILIARIZATION WITHIN
AGRICULTURAL REGIONS OF SOUTHERN BRAZIL



1. (U) SUMMARY. In an effort to increase consular outreach and
deepen understanding of economic conditions in the diverse Sao Paulo
Consular District, two consular officers completed a driving tour of
the interior portions of the states of Parana and Sao Paulo.
Outreach goals were addressed through meetings with Bi-National
Centers in Curitiba and Londrina in Parana state. To gauge economic
conditions in the interior, the officers focused on economic
activity linked to agriculture. Conoffs toured the largest paper
mill in Brazil and visited a successful agricultural cooperative.
Parana proved to be a relatively prosperous state that is
successfully using its agricultural sector as an engine for growth.
END SUMMARY.

FACILITATING TRAVEL FOR STUDENTS


2. (U) During meetings with advisors at the bi-national centers in
Curitiba and Londrina, Parana, the officers discussed the visa
application process as it applies to students, provided updated
contact information for the section, and solicited feedback on
student experiences with the visa process. Advisors were encouraged
to inform their students of the current waiting time for interviews
and the need for advance planning. Finally, the officers emphasized
the U.S. Government's continued commitment to facilitate travel for
students with a legitimate interest in studying in the United
States.

PAPER PRODUCTION


3. (U) Paper and pulp production is a growing industry throughout
Brazil, and the Klabin mill, located near Ponta Grossa in
north-eastern Parana, is the largest paper mill in the country. The
factory is primarily dedicated to the production of paper for food
containers, e.g., milk and fruit juices. It produces approximately
2,000 tons of paper per day, half of which is exported, mainly to
Asia and Europe.


4. (U) The company has over 100,000 hectares of planted forest in
the state of Parana. The mill uses a mixture of 50% eucalyptus and
50% pine for its container paper. Company representatives said that
the practice of mixing the quick-growing eucalyptus with pine gives
the Brazilian producer an advantage over other world-wide
competitors. Eucalyptus grows at a rate of 41m3 per hectare per
year, whereas pine grows at a rate of only 28m3 per hectare per
year. Moreover, Klabin is able to harvest three times from a single
eucalyptus trunk before having to replant. While the company has
enough wood to meet its own demand, it also contracts local farmers
to plant pulp trees to get "buy-in" from the local community
regarding wood production and to help guarantee adequate future
supply.


5. (U) Over the last year, the Klabin Company also began
construction of a new mill adjacent to the existing site. The new
plant will double current production. Interestingly, despite
production growth, direct hires at the current mill have fallen from
over 2,000 to less than 1,200 due to investments in new technology.


A DIVERSE AGRICULTURAL COOPERATIVE


6. (U) The Cocamar Cooperative is a well-organized farmer
cooperative located in Maringa in north-western Parana. It has over
6,000 associated farmers and directly employs over 1,000 people. A
primary goal of the cooperative is to engage directly in product
processing and marketing so that farmers are able to retain a
significant portion of the value added to their products. Toward
this end, Cocamar has enjoyed more success than most other Brazilian
cooperatives. It processes and markets under its own label a wide
variety of agricultural products that includes oranges, coffee, soy
beans, sugar cane and even small amounts of silk. In fact, local
silk and cotton help supply the cooperative's clothing manufacturing
operation. The relative importance of this activity has been reduced
as regional cotton production has declined over the past decades.
Even so, the cooperative continues to innovate; for example,
defective plastic grain-oil bottles are reused as primary material
for clothing manufacture.


7. (U) The Cocamar Cooperative also strives to make family farming
a viable business model. Most of the member farms are smaller than
100 hectares (about 250 acres). Cocamar leaders perceive a lack of
rural labor as one of the greatest coming challenges for the
region's farming sector. Urban migration is a common phenomenon
throughout Brazil, and Cocamar executives worry that it is an
increasing threat to agricultural production. As a result, they
promote the family farm model, where a diversity of crops on a
single farm can employ several year-round workers, as opposed to

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large mono-crop operations, which require large numbers of temporary
workers at peak times of the year.

CONSULAR INSIGHTS


8. (U) ConGen Sao Paulo covers six states with an area equivalent
to that of the western United States (Washington, Oregon, Montana,
California, Idaho, Nevada and Utah). Within such a large area,
there are widely divergent levels of economic development and
poverty. This tour of one of the richest agricultural areas of
Brazil reinforced the contrast between the southern states of Sao
Paulo and Parana with their northern neighbor, Minas Gerais (which
Sao Paulo covers solely for NIV purposes). With the exception of
the southern border region, the small and medium-sized communities
within central and northern Minas Gerais are visibly less prosperous
than similar, agricultural-based communities within Sao Paulo and
Parana.


9. (U) Outside of overall regional impressions, it is often
difficult for visa officers to determine the economic situation of
applicants who do not receive an officially registered salary. This
problem is aggravated by the Brazilian tendency to underreport
earnings for tax purposes. Farmers are a particularly problematic
group. In order to help with decision-making, the discussions with
the Cocamar, individual farmers and USDA representatives yielded
some useful points of reference to help with consular decision
making:

-- Based on current export prices, an acre of producing coffee
plants yields approximately US$1,000 in profit annually.

-- Cocamar producers claimed that a good living could be made with a
little over 10 hectares of established orange groves (in Parana a
tree can produce 150kg of fruit a year, as opposed to only 100kg in
Florida).

-- Sugar cane is the 'hot' product because of the increased
international and domestic demand for ethanol. Returns from
investment in sugar cane are expected to be high and large tracts of
land are being converted to its production. This is especially true
in northern Parana and in Sao Paulo State.

-- Cigarette producers have negotiated strict production limits with
individual farmers to diversify production sources. Each farmer is
allowed only two hectares of production; however, such small plots
are highly lucrative and can provide enough income to sustain an
entire family.

The cost of living in Parana is significantly lower than in
metropolitan Sao Paulo. The cost of items such as food, clothing
and even housing in Parana are a fraction of the comparative cost in
the city of Sao Paulo.

COMMENT


10. (U) Due to a mix of factors, including drought, availability of
credit, and the relatively high current value of the Brazilian Real
on world foreign exchange markets (which hurts even small,
non-export oriented farmers as local commodity buyers still price in
dollars),Brazil's agricultural sector remains in what is generally
described as a state of crisis (see septel on the Consul General's
trip to the far west of southern Brazil). Nonetheless, the
cooperative model seems to be thriving in the state of Parana, and
Conoffs have noted that numerous cooperative farmers have
successfully applied for visas in the last year to attend
agricultural events and exchanges in the United States. Moreover,
the Sao Paulo Consulate has a long-standing history with an
agricultural student exchange program run by a Sao Paulo
cooperative. Finally, the impression of both cooperative and USDA
representatives was that the 'state of crisis' in Brazilian
agriculture within the states of Sao Paulo and Parana was only
relative when compared against the extremely favorable conditions
enjoyed by these farmers over the past few years. END COMMENT.