“Cowgate,” as it has inevitably been dubbed, is providing rich fodder for the opposition as it digs up dirt on a publicly funded cattle-rearing project that it says was used as a personal fund for the family of one of Najib’s ministers.

It is not the first corruption scandal to hit Najib and his long-ruling United Malays National Organization (UMNO), but the farmyard connection makes it a potentially damaging one because rural Malays — the bedrock of UMNO’s support — may relate to it more easily than to more obscure financial matters.

“The cow issue is God given,” Zuraida Kamaruddin, the head of the women’s wing of the opposition People’s Justice Party, told Reuters following a speech at a recent rally, which she punctuated with the occasional “moo” for comic effect.

“This time we have real evidence that proves their mismanagement.”

The family of Women, Families and Communities Minister Shahrizat Abdul Jalil is accused of using 250 million ringgit ($83 million) in soft government loans meant to develop the cattle project to buy luxury apartments, expensive overseas trips and a Mercedes.

Meanwhile, the National Feedlot Centre (NFC) project was found by the auditor general to have done little to reach its initial goal of making the country 40 per cent self-sufficient in beef production by 2010.

Najib last month froze the assets of the NFC, which is under investigation by Malaysia’s anti-corruption commission. With fresh allegations appearing almost daily on the country’s lively Internet news sites, the scandal adds to growing temptations for him to delay elections that must be called by April 2013.

The 58-year-old son of a former prime minister had been expected to call the polls around April, before a looming global slowdown risked hurting Malaysia’s trade-dependent economy.

But with the U.S. economy showing signs of recovery and the euro zone not yet imploding, he may feel he can wait and hope for the scandal to blow over while recent government handouts to poorer families take effect.

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Destruction of the forest, which is a vital global climate regulator due to the vast amount of carbon it stores as well as a caldron of biodiversity, is driven mainly by farmers who clear Amazon land for crops and livestock.

Supported by the powerful farming lobby, the proposed changes to Brazil’s 1965 Forest Code would take away important powers to set forest protection policy from the federal government and give them to states. Environmentalists say this would spark a race to laxer standards.

The measure also would give amnesty to people fined for violating the current forest code up to 2008 and sharply cut the amount of land that owners would have to save as forest.

The legislation could cause problems for President Luiz Inacio Lula da Silva or his successor to be chosen in October’s presidential election in which Lula cannot run.

A special committee in Congress passed the measure this month. It is expected to be voted on by the full Congress this year, likely after the elections.

“It will be a huge embarrassment for whoever gets into office,” said Fabio Scarano, the executive director of the Conservation International Brazil environmental group.

“Environmentally it’s a disaster from what science tells us, and from the agricultural point of view it’s also a disaster. The water they use for irrigation is the water that is protected by these very reserves. All sides lose,” Scarano added.

Supporters of the bill say it would make Brazil’s agriculture sector more competitive by giving farmers more access to productive land. They point to language in the bill that would require a five-year moratorium on new deforestation as evidence that the measure, if made law, would not herald a new wave of Amazon destruction.

Farmers say that stricter protection rules over the years have left many of them outside the law, even though they themselves may not have been responsible for clearing the forest land now used for farming.

Under the bill, farmers in Amazon states would need to keep only 20 per cent of their land as forest, down from 80 per cent now.

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“This will give us more strength.”

– OZANO DOS SANTOS

Ozano dos Santos admits to knowing little about the global economic crisis beyond snippets of Brazilian television news and conversations at his small bar. But he senses it can only be a good thing for the movement he calls his “father.”

“This will give us more strength,” said Santos, who joined the Landless Rural Workers Movement (MST) in the mid-1990s, one of hundreds of thousands to take on a stubborn fight for land that turned 25 years old last month.

At the 17th of April Settlement in the northeastern Amazon state of Para, named after the date of a massacre nearby of 19 MST members by police in 1996, Santos runs his small bar at night and farms his land with about 700 other families.

“We see that the big companies are laying people off and the only thing that can happen is that these workers will enter the movement and seek land,” he said.

Santos’ view is being echoed by the leadership of the world’s biggest agrarian reform movement, who see the crisis as a chance to reinvigorate their battle against big companies they blame for perpetuating inequitable land distribution.

But at 25, the group once described as the world’s most important social movement that has won land for hundreds of thousands of Brazil’s poorest, is showing signs of middle age.

Some see it as having lost its focus as it has expanded its fight to big corporations and held fast to a Leninist-based ideology that has little broad resonance in Brazil.

Its high hopes that President Luiz Inacio Lula da Silva would hasten land reform have been dashed as government redistributions of land have slowed to a crawl in Lula’s second term that started in 2007. It says the former factory worker has increasingly sided with big business and agricultural expansion.

Meanwhile, Lula’s flagship family stipend program has made huge inroads into the rural poverty that fuelled the MST’s struggle and made it an irresistible force in the 1990s.

Slowing reform

Using a strategy of sending hundreds of activists to stubbornly occupy land, the MST says it has settled 350,000 families since peasants mounted their first operation in 1984 in southern Rio Grande do Sul state. In total more than a million families have been settled since the 1990s, helping redress one of the world’s least equitable land distributions.

But the number of people settled has been falling fast since 2006 and the MST estimates it hit a low of just 20,000 families in 2008.

The slowdown is also due to urbanization and agricultural modernization that have sharply cut demand for land reform, said Zander Navarro, a Brazilian sociologist who used to be involved in the MST’s fight and is a professor at Britain’s Sussex University.

“There is no significant social demand for land anymore,” he said, adding that the country’s northeast was an exception.

He said that trend had led the MST in recent years to broaden its fight to include opposition to the NAFTA free trade pact, genetically modified crops and actions against big businesses, al ienat ing many who sympathized with its land struggle.

“As far as I’m concerned, they’re just thieves and robbers,” said Peter Bodman-Morris, a British businessman whose grape farm in Bahia state was invaded by 150 MST families in 2006. He said he lost investments worth $3 million and has been unable to prosecute the organization.

The crisis has chilled much of Brazil’s export-based agriculture boom of recent years. The MST’s hope is that the plunge in commodity prices will open up more unproductive land for it to occupy.

But Navarro said the crisis would not help the MST much because productivity levels had risen and Lula has declined to sign a decree that would open the way for more redistribution.

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From bulging foreign reserves and the emergence of corporate giants to the destruction of vast areas of the Amazon rainforest, booming commodity prices have reshaped Latin America as supplier of the world’s raw materials and underpinned its resurgent economies.

The region is now better prepared to weather this shock than past crises because it has stronger budgets, bulked-up dollar reserves and lower levels of foreign debt.

But with prices of everything from Chilean copper and Brazilian beef to Argentine soybean all sliding on expectations that the financial crisis will force a global slowdown, economists are sharply cutting growth forecasts and farmers are preparing for harder times.

“It’s unbelievable that in four or five months we’ve gone from healthy margins to where we are today. It’s a disaster,” said Ruben Berardo, a farmer in Argentina’s central Entre Rios province.

The Reuters-Jefferies CRB index of commodities prices fell to a year low of 289.89 last week, down from a high of nearly 474 on July 3. Although the dollar’s rise gives some relief, the price falls will squeeze governments that have used the boom of recent years to go on spending sprees.

Venezuela President Hugo Chavez has used high oil prices to fund socialist spending policies, and some analysts predict a prolonged price fall could force him to tighten belts.

President Luiz Inacio Lula da Silva has ridden Brazil’s commodities-driven boom to 80 per cent popularity ratings, helped by social programs that lifted millions out of poverty.

While Lula at first mocked the United States over the crisis and said Brazil was not in danger, the country’s policy-makers have in recent days had to rush to provide liquidity to banks and local financial markets.

For Argentina, one of the world’s biggest producers of soybeans, corn and wheat, falling grains prices could sharpen tensions between farmers and President Cristina Fernandez.

With soy products alone accounting for a quarter of export revenues, Fernandez has been forced to cut government spending, vow to chop energy subsidies by over $1 billion and make conciliatory steps toward foreign creditors and bondholders.

Months of protests by farmers and their supporters cooled when Fernandez revoked a tax hike on soy exports in July, but tumbling prices for key exports have fuelled their calls for an overhaul of government policies.

Budget, political strains

In Brazil, where some 60 per cent of exports are commodities related, heavy stock market falls since May have partly reflected the decline in global prices for oil, metals and agricultural goods.

Morgan Stanley sees growth in Latin America’s largest economy falling to two per cent in 2009, sharply below the government forecast of 4.5 per cent, largely reflecting lower prices for its exports.

“In our case, the commodity has collapsed, so obviously our margins have decreased tremendously,” said Laurence Pih, chief executive of Moinho Pacifico, Brazil’s biggest wheat processor.

The price for the wheat that Pih’s firm processes had last week fallen 59 per cent from $13.5 per bushel in February.

Surging demand from China and India has in recent years led farmers in Brazil, Paraguay and Argentina to expand land for soybeans and other crops from the Pampas to the Amazon, where it has fuelled deforestation.

Now, farmers face falling prices and a drying up of credit just as the grain-planting season starts.

“It could be the worst of all worlds – plant an expensive crop, without credit, and harvest it at low prices,” Roberto Rodrigues, a former Brazilian agriculture minister, wrote in the Valor business newspaper last week.

The decline in coffee prices to their lowest levels in well over a year is also hitting the impoverished countries of Central America, where coffee is the top agricultural export.

“If the trend continues, producers will definitely have to be more frugal in their investments,” said Honduras’s trade minister, Fredys Cerrato.

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