LUIS EDUARDO MAGALHAES, Brazil (DTN) -- Brazil is not for the faint-hearted, as the experiences of Ed Zanini, Scott Harker, Tyler Bruch and others whose stories were recounted in earlier installments in this series indicate. But if you're a farmer with a taste for adventure, a stomach for risk, and the patience for mind-boggling bureaucracy, this rugged outback can provide you with endless opportunity.

The less capital-intensive route is to invest in a company or fund already farming in Brazil. The advantage of this option is you can control the amount of time and capital you want to commit, while not having to deal directly with the cultural differences of farming in a foreign country. There is usually an easy exit strategy, if you need your investment back in a hurry. Return, however, can be limited, especially in the early years, and you have to be careful which company you choose.

The more adventurous route is to go it alone, or with the backing of a small group of friends and family. This is by far the more difficult route, but also the most rewarding, both emotionally and financially. It won't be a smooth ride, but it's difficult to find anyone, even those who've suffered severe financial loss, who regrets their time in this contagiously gripping country. Ed Zanini, who is still tied up in court trying to get compensation for land that was grabbed from him more than 30 years ago, has few regrets. Scott Harker, who lost everything in Brazil, still has fond memories of his brief time here. Despite some losses, Tyler Bruch says he has gone through worse experiences and is still optimistic about his future in Brazil.

If you do decide to go it alone, here are guidelines and advice from seasoned pros that will help boost your chances of success.

PATIENCE

Count to 10 before you buy land in Brazil. And that's months, not seconds.

It may sound like an exaggeration, but some American farmers, perhaps overly excited by the opportunities in Brazil, jump in head first.

"I know a couple of farmers who bought land while on a tour down here for the first time," said Matthew Kruse, who has been in Brazil since 2004 and manages 23,000 acres for the Brazil Iowa group. "They literally hopped off the bus and opened their check books. Needless to say, it wasn't a good deal for them."

It is important not to focus on price alone when buying land.

"Some people get carried away by cheap land prices. But you also need to consider things like location, soil quality, rainfall, outstanding taxes and debts and existing leases," said Brian Willott, a native of St. Peters, Mo., who has been farming in Brazil since 2003. "All land is not equal. You need to do your homework."

One alternative is to lease land during the first year in Brazil. This will give you a feel for farming in a frontier region, before committing all your capital. It also allows time to come to terms with the language, and to scout for the best opportunities.

"The more people you talk to the better, and not just other Americans," said John Carroll, who has been in Brazil since 2002 and manages 29,000 acres. "Most Brazilians are very open and accessible. They will help you all they can."

However, even when leasing land, it can take time to get set up in Brazil. The pace of doing business here is very slow, including paper work and getting funds transferred, but also the logistics of getting crop inputs.

"It's not like the U.S. where you can make a phone call and the next day your fertilizer is delivered to your door," said Kruse. "Even with established relationships, you need to allow six months of planning time leading up to the planting deadline."

Scott Harker, from part 2 of the series, had first-hand experience of the slow pace of doing business in Brazil. Red tape and tight credit delayed planting, which led to poor yields, and eventually failure.

If your timing is off, there is also the possibility of working on a local farm to gain experience.

"We are always looking for help," said Carroll. "It will give you time to adapt to Brazil and learn the peculiarities of farming here, and also allow time for the paper work and bureaucracy to be settled."

CASH IS KING

One of the main reasons farmers fail in Brazil is lack of working capital. Interest rates are among the highest in the world, reaching 2 to 3 percent a month for operating loans, and even then, credit lines can be hard to come by.

Newcomers will find it particularly difficult as they won't have a local credit history -- something that takes two to three years to build up.

"You should bring twice as much money as you think you'll need," said Carroll. "Use half to buy land and the other half for working capital. You can get very good deals here when paying cash."

Also, don't underestimate the cost of setting up and doing business in Brazil. This was a fatal error for Scott Harker, but others lived to tell the tale.

"We didn't realize how much it would cost, or the time it takes to develop the soil here," said Brazil Iowa's Kruse. "I don't think anybody really knew back then, even the locals."

It is common for newcomers to look at average yields for the region and assume they will start producing that amount from day one. Cleared land, however, doesn't necessarily mean developed land.

"Even after the land has been cleared, it can take 5 to 6 years to correct the soil and reach top yields," said Kruse. "It is no coincidence that those farming here the longest, like Walter Horita, have the highest yields."

And when it comes to revenue, business plans and projections can often omit the wide basis in Bahia, especially at harvest time, with average discounts of $1.50 to $2.00 on the Chicago Board of Trade.

"Finance influences marketing much more than it should here," said Kruse. "Many times you have to sell out of necessity rather than choice. Cash management can be very difficult and time consuming."

GREEN LAWS

Brazil's labor and environmental laws are much more complex and stringent than in the U.S.

For a start, farmers must maintain set-aside areas that can range from 20 to 80 percent of their farm, depending on location, with no compensation from the government.

In times gone by, these rules were not always strictly enforced, but this is no longer the case.

"You should always do things by the book down here," said Willott. "People will sometimes tell you to ignore certain rules or laws, but that can result in huge fines and bring long-term headaches."

And even when you think you are operating within the law, you may still be in for a surprise.

"We worked closely with state authorities and got permits to develop two-thirds of our property," said Scott Thornburgh, a partner in the U.S.-based Harvest Capital, which purchased the undeveloped 30,000-acre Two Rivers farm in Tocantins state in 2004. "However, just as we were ready to start work, the federal environmental authorities stepped in, and we're still waiting on approval."

And while labor is cheap by U.S. standards, there are a lot of taxes and hidden costs, and skilled labor can be difficult to find.

"We get people turning up looking for work everyday," said Kruse. "The hard part is training them, which takes a lot of time and patience, and then they just up and take off."

John Carroll agreed that dealing with labor issues can be time consuming and something that most American farmers have little experience or patience dealing with.

"There is a 50-page labor manual to follow," said Carroll. "We needed to get special bunk beds made, because the manual said height between beds should be 110 cm, but standard store size is just 100 cm."

SOUND ADVICE

The best piece of advice when starting out in Brazil is to get good legal and accounting assistance.

"This is one area you shouldn't try to skimp on," said Willott. "Go to one of the bigger cities like Sao Paulo, or Brasilia, and hire independent professionals. It will save you a lot of time and headache down the road."

Ed Zanini, from earlier in the series, could have benefitted from this piece of advice, as the local lawyer he first hired was in cahoots with the people who stole his land.

You also need to be flexible, as there will be plenty of surprises on the way.

"We originally thought we would be growing soybeans and corn," said David Kruse, founder of Brazil Iowa. "Now our main business is growing and ginning cotton."

According to Thornburg of Harvest Capital, it is helpful to have a good local partner.

"When we were held up with permits, our partner suggested leasing land while we waited," said Thornburg. "That was four years ago, the permits still haven't arrived, but in the meantime, we have made over $2 million dollars in operating profits."

Also, don't just rely on advice from other Americans. Listen to Brazilians who have been farming the region much longer.

"You can never know it all," said Brazilian Laercio Botorlin, who is originally from the south of Brazil, but has been farming in Bahia for the past 26 years. "We are always learning. This is a new region, more sand than soil, nobody really knows its potential."

And finally, you have to learn to expect the unexpected.

"You need to be constantly alert to change," said Dan Carroll, John Carroll's father. "The only thing you can be sure of in Bahia, is that it never gets cold."

Kieran Gartlan can be contacted at kieran.gartlan@dtn.com

(UL/CZ/AG)

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