Sao Paulo Drought Could Benefit Brazil

Stratfor, 2/2/2015

The state of Sao Paulo, Brazil’s financial core, remains in a drought of historical proportions, and we expect to continue seeing reports of water shortages in the greater municipal area of the city of Sao Paulo. Further water restrictions and rationing will be necessary if the region does not receive substantial amounts of rain in the next several months. While we may see a small drop in industrial activity, wealthier consumers — residential and industrial — will be able to find and use more expensive alternative sources of water. The shortage may contribute to the slowing of Brazil’s economy, but it will not cause a collapse. Rather, the drought will be a relatively short-term water stressor and has the potential to be a catalyst to solve Sao Paulo’s larger structural problem of inadequate and inefficient water infrastructure. In the long run, it could even benefit the industrial viability of the city and state.


The worst drought in nearly a century continues to plague Sao Paulo state and neighboring Rio de Janeiro and Minas Gerais states in southeastern Brazil; the nearly 30 million people living in the extended municipal complex of Sao Paulo have been dealing with extremely low reservoir levels for more than a year. In fact, the water reserves have fallen so low that they are now below the dead level, the point at which the water must be pumped up to reach the pipes connecting the reservoir to the greater distribution system. In late 2014, the Cantareira system authorized the use of its second quota of dead volume. The system is at roughly 5 percent of its capacity and is considering authorizing a third quota. If usage continues and the reservoir is not replenished, projections indicate that it will run dry by September. Other reservoirs supplying the city have also declined over the past year, including the Alto Tiete, which like Cantareira has approved the use of its dead volume.

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Dilma Rousseff Emerges as Front-Runner in Brazil’s Election but Faces Runoff

Simon Romero – The New York Times, 10/5/2014

President Dilma Rousseff emerged on Sunday as the front-runner in one of the most tightly contested presidential elections since democracy was re-established in Brazil in the 1980s, but she failed to win a majority of the vote, opening the way for a runoff with Aécio Neves, the pro-business scion of a powerful political family.

The strong showing by Mr. Neves, a senator from the state of Minas Gerais, enabled him to surpass Marina Silva, an environmental leader who soared in opinion polls in September, only to be eliminated from the race.

Ms. Rousseff got 41.5 percent of the vote, against 33.7 percent for Mr. Neves and 21.3 percent for Ms. Silva, electoral officials said, with 99 percent of votes counted.

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Brazil busts gang linked to Bolivian drug traffickers

Fox News Latino, 9/26/2014

Twenty-six people were arrested in an operation targeting a gang with ties to drug traffickers in neighboring Bolivia, Brazilian police said Friday.

The organization specializes in smuggling drugs into Brazilian territory on small planes that secretly land on rural runways of the Triangulo Mineiro area of Minas Gerais state and in the southern part of Goias, according to a Federal Police communique.

The gang is also suspected in a number of drug-related homicides.

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Electorate hopes for a government that unites growth with inclusion, says professor

Leonardo Avritzer

Leonardo Avritzer

Gabriel Manzano – O Estado de S. Paulo, 8/4/2014

For Avritzer, the challenge of the candidates for the Planalto is to show that they can better the economy without putting social achievements at risk.

The Brazilian electorate is communicating to the candidates for Presidency two clear messages: it wants growth, but without discontinuing the enlargement of social inclusion. “The candidate that convinces the voter that it will continue to stabilize the current (economic) crisis in a manner of greater inclusion and greater increase of the job market will most likely be the one who receives the greatest support,” notes the political scientist Leonardo Avritzer, from the Federal University of Minas Gerais and president of the Brazilian Association of Political Scientists (ABCP).

His evaluation constitutes, in practice, a challenge for the three main candidates for the presidency. In short, President Dilma Rousseff (PT) valued inclusion but the country didn’t grow. Aécio Neves (PSDB) promises changes in the economy but his agenda for inclusion still is unclear. Eduardo Campos (PSB) speaks of reconciling the two halves but has not yet “sold” the message.

For this electoral scene, the impact of the economy on the polls and the social agenda are in the center of discussions of the 9th National Congress of Political Scientists, promoted from today until Thursday, in Brasilia, by the association presided over by Avritzer. The event will bring together 1,100 people in more than 800 lectures and roundtable discussions. In a conversation with O Estado, it created an intersection of the themes of the campaign with those of the meeting, which will receive scholars from Argentina, Chile, and the USA, among others. Following are the main excerpts from the interview. Continue reading “Electorate hopes for a government that unites growth with inclusion, says professor”

Brazil’s Coocafe Sees Its Coffee Output Down by About One-Third This Year

Jeffrey T. Lewis – The Wall Street Journal, 7/22/2014

Brazilian coffee cooperative Coocafe expects production among its members to fall by about one-third this year because of the recent drought, its president said Tuesday.

Coocafe, which represents about 6,000 growers around the town of Lajinha in Minas Gerais state and some in the neighboring state of Espirito Santo, expects to produce between 900,000 and 1 million bags of coffee. Last year, the farmers produced 1.5 million bags of coffee.

The harvest is nearly over, said Coocafe President Fernando Romeiro de Cerqueira. Output would have fallen more, but the group’s farmers are harvesting coffee from a bigger area this year compared with last year, he said.

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Laif Meidell: Brazil drought pushes up coffee index

Laif Meidell – Reno Gazette-Journal, 7/21/2014

From the start of the year through Monday, the Standard & Poor’s GSCI Coffee index has risen 56.18 percent following the worst drought in decades to hit Brazil. Specifically, earlier this year, the state of Minas Gerais, Brazil, where roughly half of the country’s coffee is grown, experienced less than 40 percent of the normal amount of rainfall in the first half of the year.

Even with prices up this year, Brazilian coffee growers exported 21 percent more coffee in June than a year ago. Although, large stockpiles left over from last year have been able to help meet the recent demand, roasters appear to be buying now in anticipation of potential crop shortfalls in 2015. According to coffee growers, lack of rainfall not only affects the size, shape and weight of the coffee beans this year, but will also hurt next year’s harvest.

The nearly 20 percent decline in coffee prices from this year’s April peak, may be creating what some believe to be a buying opportunity in coffee for those roasters and others worried about 2015. This week coffee is back at the top of our commodity list with the S&P GSCI Coffee index gaining 5.19 percent over the past five trading days.

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Brazil captures band trafficking arms to US

The Associated Press, 09/04/2013

Brazilian police say seven people have been detained and 22 high-caliber guns and munitions have been seized in an operation targeting a band that trafficked in arms from the U.S. by hiding them inside mattresses.

Federal police in Minas Gerais state said in a statement that five suspects were arrested in Brazil and the other two in the United States, with the help of American officials.

The .762 caliber guns were accompanied by an “enormous quantity of munitions,” the statement said. It said the weapons were to be resold in Brazil, mostly to gangs operating in the slums of Rio de Janeiro and other states.

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Brazil halts municipal market as banks collect $140 million fees

Boris Korby, Raymond Colitt & Francisco Marcelino, 08/20/2013

A year after it began, Brazil’s municipal bond market has been brought to a standstill by the federal government after Credit Suisse Group AG (CSGN) and Bank of America Corp. provoked a backlash by collecting $140 million in fees from the first two borrowings.

The second-largest Swiss bank provided a $1.27 billion, federally guaranteed loan to the state of Minas Gerais in February and then packaged and sold the debt as securities to investors a month later at a markup of 9.2 percent, or about $116 million. Bank of America earned $24 million, or 3.6 percent, by selling $662 million of notes backed by a loan to Maranhao state last month. The profits compare with the 0.25 percent fee Brazil paid to underwriters on a $1.35 billion bond sale less than a year ago, or about $3.4 million.

Brazilian Treasury officials, who approve state financing requests and provide guarantees backing loans, are starting to demand terms to curb the profits, seeking to protect taxpayers from being exploited and to limit their own borrowing costs while alienating bankers in the process. State officials at Mato Grosso and Parana say the demands are imperiling loans they’re seeking from Credit Suisse, derailing a market the government had projected could grow to as big as $25 billion by 2014.

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Antonio Anastasia Presents Minas Gerais’s Potential to American Enterprises

Agencia Minas, 11/26/2012

On an official visit to the United States, the Governor highlighted the state’s favorable environment to possible investor from large corporations.

On Monday, November 26th, in Washington D.C., the governor, Antonio Anastasia, met with American enterprises and potential investors of large corporations to present the state’s potential and the socio-economic advances it has made over the past few years.

Minas is has the third largest economy in Brazil and is the second exporting state. The event was organized by the American division of the Brazil-U.S. Business Council and the Brazil Institute of the Woodrow Wilson Center.

Nearly 40 representatives from businesses and American institutions, including Alcoa, FedEx, Global Latitudes, John Deere, Kenbridge America, Kennedy Consulting International, Lockheed Martin, McLarty Associates, Oracle, SAP, Shell, The Cohen Group, U.S. Business in Brazil, Unica, ALCDA, Altrius Group and stakeholders interested in Minas’s economy attended the Governor’s presentation.

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