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Imperilled Riches CATTLE PASTURES Cattle pasture land set aside in the 1970's and 1980's was an especially poor choice because a large portion was located on the minority of fertile rainforest soils (volcanic and floodplain soils). For example, cattle pasture land in Honduras takes up over 40% of the country's fertile land. Cattle grazing in the tropics is relatively inefficient: initially each hectare of cleared land may support an animal, but after 6-8 years, each animal may require five hectares. Nonetheless, cattle are an attractive option in Latin American rainforests. By simply clearing forest and placing a few head on the land, colonists and developers can gain title to the land in some countries (notably Brazil). They often chose cattle over other options because cattle have low maintenance costs and prove to be highly liquid assets easily brought to market. Additionally, cattle are a low risk investment relative to cash crops which are more subject to wild price swings and pest infestations. Vast swaths of rainforest are cleared and used for cattle grazing in Latin America for land speculation purposes. The land tenure system in many countries promotes such conversion of land from a natural productive asset to a speculative one by wealthy landowners and speculators. When real pasture land prices exceed real forest land prices, land-clearing is a good hedge against inflation which has been rampant in many developing countries at times in the 1980s and 1990s (2500% in Brazil in 1993, 13,340% in Venezuela from 1993-1998). In many cases, the growth of land prices is greater than inflation making such land clearing a good investment regardless of the use of the land. Additionally, at times of high inflation, the appreciation of cattle price and the stream of services (milk) they provide may outpace the interest rate earned on money left in the bank. |
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Copyright Rhett Butler 1994-2005 |