Last night on the way to Church, I was remarking to Sandy that this was about as long of a day as you see in Brazil. You could still see at 6:45 PM. She commented that it probably was close to the longest day, based on the calendar. Google tells me that the winter solstice is between 10:00 and 11:00 PM central standard time, today. About 3 hours later, tomorrow, it will be the summer solstice in Brazil, the longest day of the year.
We have been spending Sunday nights in town. On our arrival, a neighbor told us that there have been some car-jackings on our municipal road, and that she did not recommend that we drive at night. The neighbor had a couple of trucks that ran through an attempted truck-jacking. All the talk is about the large number of Toyota pickups that have been high-jacked. (Pickups are the easiest to sell without papers for off-road use in rural areas.) Another neighbor told us that they know some with a Toyota pickup that out-ran the robbers. The bandits shot in the air, but they did not shoot the Toyota pickup. Even for a sale without papers, bullet holes would probably hurt the price.
The problem with the car-jackings will pass with time, but we will wait a bit longer for the situation to improve. Thieves come in many forms in Brazil. I was joking with someone the other day suggesting that it was probably worse to have someone from the Brazilian government visit you than a regular robber. That inspired a lot of laughs and horror stories about huge unjust fines being levied against farmers. I then told my guests about our latest robbery.
In June, the power company replaced our electric meter. They claimed that it was not working. I heard nothing about a change in the bills from my Brazilian accountant who was responsible for paying the bill. Because of earlier trouble with the power company related to irrigation, I ended automatic debit of the business chekcing account for the electric bills. It seemed that I had solved the problem with the power company. First, we had never had a high bill related to the headquarters area. The meter worked well and the bill always made sense. Finally, I had a real person paying the bill who would surely send an email if the bill was 50 times higher than normal, right. Surely, my accounting firm would let me know if there was no money in the account to pay the power bill, because the bills were so large, right? Wrong!
I asked the assistant in the accounting firm for a report on the business account in October, but only received from her the new International Banking Number that I requested to wire money to the account and the new higher amount of their bill for accounting services. No report followed, but I assumed that all was well and the accounting office was just busy.
A few days ago the meter man arrived to read the fancy new digital meter. He gave me a copy of the last power bill which is due in a few days. I commented that it was over 20 times larger than it should have been. He reminded me that he was only responsible to read the meter. Don’t shoot the mesenger, right? No, if messengers were shot on a more regular basis, their bosses would try to the fix a problem and the messengers would insist that something be done to fix a problem. No, I was not mean to the meter man.
Instead, I took the bill and went back to my office to study the bill. I quickly saw that I had nothing to be upset about for the month that was due. The month the meter was changed was 50 times larger than normal. The next month was 100 times higher than normal. The next month was 10 times larger. the next month was normal. (The power was out or the breaker was off.)
I grabbed my phone, and after a mere 30 minutes was able to open the power company’s cluncky web page and find my bill history. According to them only the first big bill was paid. The others are delinquent. From my earlier experience, I can tell you that the power company always gets paid. They are never wrong. In the States, I have a great rural electric cooperativbe that provides my local power. What a hard working group of fine people! That has not been my experience here over the last 13 years. Hence, the reason that all of this started with the joke, “Which is worse, a robber at your gate, or the local… you fill in the blank.”
I called a fellow that was a journey man electrician and asked him to line-up the best expert that he knew. They finally arrived, today. Earlier, I went by an electrical supply store and arranged for them to get all the parts they might need. They showed-up with a new circuit breaker for the power exiting the digital meter. We had all agreed that the old breaker was a wreck. I had insisted on a new meter, but I wanted the old clock-like style that actually worked. Forget this new digital stuff! The guys arrived and went to work. I showed them where the new plastic enclosure was that was never installed with the new digital meter. When I checked on them, I questioned the digital meter. They told me it was a new meter. At the end, I asked them how in the world the new meter had exactly the same KwH reading as the old meter. Ya, it was the old meter. They came clean, but told me they were sure it was the breaker. They went to a lot of work to install the new enclosure, with the old meter. I guess it was just too much work to go back to town with the old meter and trade it for a new one. After all, they are not paying the power bill. I did not shoot them. My friend, the journeyman will probably come back to help me again. The expert is a different story.
So, the expert told me to check the three phase well pump to see if all seemed to be working. I gave the well pump a close look. I told him, “No, we have a big problem. The pump is pulling over 20 amps and it normally pulls less.” He suggested that if the water tower was filling, then all was well. I was ready to draw blood, and so I paid the guys and sent them on their way.
Over lunch, Sandy asked me if it was fixed. I just kept shaking my head. I explained that the situaiton was worse. The well pump was eventually going to burn itself out. I told her that it was pulling 4 times as many Amps as I rememberd. Surely, they had reversed the rotation on the lines. It is a three phase pump. If you switch two wires, something easy to do when you connect a new electric meter that is not like the old meter, the rotation of the motor would change. The pump would run in reverse. The pump might still fill the water tower, but it would take a lot longer.
After a great lunch, I went to the water tower and turned on the sprinkers in the compound until the pump started. I shut everying off, including the nice new breaker at the meter and the additional shut-off switches that isolate the line from the utility company. The control box for the three phase pump was an easier experiment than pulling the fuses ahead of the electric meter. I switched the position of the black and white wires in the pump control box. Shazam, it pulled 7 amps instead of over 20. It also sounded more like it did in the past as it filled the water tower. Problem solved… hopefully. Now, I need to pay the huge power bill. Remember, the power company is never wrong. It was my side of the meter, right?
We remained in the States after harvest to attend a wedding, but we made good use of the time. Like most people in agriculture, we are never short on something to do. It was great to get back to our friends and farm in Western Bahia. Our friends always joke with us that we bring the rain. They mean that as a compliment. After the dry season of the desert Northeast, the rain is always a welcome sight.
It rained about 4 inches when the dry season ended along with the month of October. After that, the faucet shut off. With our arrival on the Thursday of Thanksgiving day, people were crying for a rain, and planting had stopped as farmers were waiting for it. We had a widespread rain of 2.5 inches just two days later. There were smiles on the faces of everyone we saw. Those smiles have since faded.
As I write, it looks like a rain may be arriving. The wind is blowing and another 100 degree day has given way to the hope of precipitation. We will see.
It is always difficult to make generalization about the weather in a country bigger than the continental U.S. For example, our state is larger than Montana and smaller than Texas. With that said, folks say it is unusually wet in the South of Brazil. (The historic big production state in Brazil for soybeans is Parana in the South.) It is definitely unusually hot and dry in the central part of the country. (Today’s leading soybean producing state is Mato Grosso in the west central part of the country.)
When I say hot an dry, I mean average temperatures for November and December 5 degrees above normal. Some would shug that off as not significant; however, the locals say that September and October were nearly 10 degrees above normal. It is the first time in memory that Western Bahia saw its coffee flowers dramatically thinned by extreme heat. How that will translate into coffee yield in June and July of 2016 is anyone’s guess.
Meanwhile, back at the farm at Blue River, all is well. I went swimming today for the first time since our arrival. It was wonderful! My wife, Sandy, must get tired of me saying after every swim, “Why don’t I do this every day? It was wonderful!”
The water was crystal clear, but extremely low. My neighbors are continuing to try to pump the river dry. On the other side of the river and the other side of the jungle (aka Jurrasic Park), the neighbors are double cropping beans and corn. They had a large field of irrigated coffee, but they sold out. The new owner ripped up all of the trees on their side of the river, and put in 3 new pivots. Fortunately, the farm at Blue River has enough river front that the spong grass of Jurrasic park, 185 acres of the farm at Blue River, recharges the river enough to make due. The river is 6 feet lower than normal, but it is still beautiful. The depth is only 6 to 8 feet. It is still a fast stream in the main swimming hole. It is all I can do to side-stroke in place in the fastest area. When swimming like that, I always think of the machines that allow people to swim in place. If I move over toward the far bank, the current is cut by a big tree growing into the water up stream. It is fairly easy to move up river to the tree. It seems weird to be able to stand on the bottom near the tree, but the same crazy current blows me back down stream when I move out from its shelter.
My super dog, Faith, is alive and well. She is a German Shepherd, and not as big has her predecessor, who was named “V”, short for Veloca Raptor. Faith is my constant shadow. I have been in the field for the last three weeks, but I spent that last three days in the compound getting things ready for friends that arrived for lunch today. Sandy’s latest killer formula is tacos with her home-made tortillas. Just when the Brazilians think they died and went to Heaven, she hits them with her chocolate cake with chocolate frosting. Then, our guests know that they are loved!
Back to my super dog, Faith. She sits in the shade above 50 yards from the river, and listens to me swim. She cannot watch me swim anymore because the blasted river is so low. She still stays away from the river. She does not bother the capibara. (We saw them on our first Saturday during the rain.) At four and half years old, she is about perfect. She only barks at night when it is needed. It is a great bark! She sounds like she is going to eat you. With the company, today, she was on the moon with excitement. The dog did not even take a drink of water until after the company had left. She did not want to miss a moment. I would agree with the dog. It was as close to a perfect day as it gets. We have had plenty of trouble since our return, but I will save that for another time. My hope is to leave you with a smile.
Since Brazil’s credit rating was downgraded to “junk bond” status by S&P, today, it seemed like a good reason to offer some comments. In addition, the exchange rate touched 3.9 Real to 1 U.S. dollar. This is weakest the Brazilian currency has been since my early days in Brazil in 2003.
When I try to summarize what has happened, it is a bit boring to read. It would be best to liven it up with some pithy bullet points:
- Back at the start of 2003, the financial world was worried that the new President, Lula, would choose the option of an Argentinian style debt default. On the contrary, Lula turned out to be pragmatic and committed himself to paying Brazil’s debt. The exchange rate saw a stronger Brazilian Real until the 2008 financial crisis.
- The strengthening Brazilian currency cut like a knife into soybean production profits in 2004, 2005, and 2006. A dollar priced sack of soybeans brought fewer and fewer Real when the Brazilian currency strengthened.
- Never the less, the great economic engine of Brazil, agriculture, continued to turn land that was worthless in 1980 into productive farm land. By 2012, some of the formerly worthless ground in the west of my state, Bahia, was valued at as much as $10,000 an acre.
- Turning an asset worth $0 an acre into an asset worth $10,000 an acre is good for your net worth. What a blessing from God! The politicians took and received most of the credit.
- Around 2009, large deposits of deep water oil were discovered off the coast of Brazil. Petrobras, Brazil’s national oil company, began raising money from investors from around the world to pay for the development of these oil fields. Finding billions of dollars of oil is good for your net worth. What a blessing from God! The politicians took and received most of the credit.
- The “Car Wash / Petrobras” scandal revealed that an estimated billion dollars in bribes were paid through various government contracts related to the development of the new oil fields and other areas of government involvement.
- At the time, the head of Petrobras was a lady named Dilma. She was Lula’s chosen successor from his Workers’ Party. She was elected as the president of Brazil in 2011, after Lula.
- Lula, and the Workers’ Party that he headed, did nothing in his 8 years as President to address the difficult business environment in Brazil. This difficult environment is often referred to as government red tape, corruption, and the Red World that Brazil is for business.
- Lula and his workers party were given the credit for the great number of people that joined the middle class of Brazil during his Presidency. Very few people realized the importance of Agribusiness, or the benefits that followed the investment in Brazil from the development of the oil fields and from China’s demand for Brazil’s natural resources.
That was still boring, but now for the good stuff. In August, I asked a friend if the business climate in Brazil would finally improve due to the problems. After all, the politicians have no clothes. Surely, change would begin and we would slowly see a reduction in the number of government employees, a reduction in red tape, and a resulting reduction in corruption. Right?
My friend said, “Kent, Kent, Kent… this month a government employee did not have the bus fare to come and do an inspection for us, but he still has a job. Dilma has not proposed cutting a single employee from the Federal government, and she is facing a budget deficit… a deficit that is not allowed. You are talking about something far more complicated than what exists. The other politicians are going to sit back and let things get worse. They see no reason to help Dilma. They see no reason why they should propose something that might be unpopular.”
To summarize, Brazil is facing a crisis that will require some fancy math to avoid or minimize, and the politicians are unable to solve 1 + 1 = 2.
In the long run, I believe that Brazil has a bright future. But change is needed in Brazil,and it will be a good thing when it comes. Unforunately, it is not coming quickly.