"Often it is much easier to reverse environmental degradation when lines of credit at low interest are available," Homero Alves Pereira, farm secretary of Brazil's leading soybean state Mato Grosso, told Reuters this week.

"Smaller farmers can then stop slash-and-burn farming when the area they are on gives out," he explained. "If we're going to succeed at preserving our forests as world assets, we need resources and rich countries will have to chip in."

Although Brazil subsidizes farm credit at below market levels, there is virtually none for restoring degraded land.

Brazil has a long history of poor farmers squatting on land on the frontiers of agricultural expansion, farming it until the fragile forest soils give out and then moving on.

Pereira said conflict abounds in Brazil's search for trade revenues, jobs and economic growth through large industrial farms; its desire to establish small, less efficient, family farming communities for landless peasants; and its need to preserve the environment on virtually zero budget.

"The policy of simply fining environmental infractions has proven to be almost totally ineffective," Pereira said.

One of the challenges lies in overcoming the country's wrenching poverty. Brazil has one of the worst distributions of wealth for a country as big and rich in natural resources.

But Brazil is also the world's No. 1 exporter of coffee, sugar and cane ethanol, orange juice, beef and poultry, and is also expected to surpass the United States in a few years as world's leading soybean exporter. Farm exports make up over 40 percent of the country's trade revenues.

"Everyone knows what big business in Brazil is: It's agribusiness. Agriculture is this country's calling," he said.

But relatively little of this boom in farm exports has trickled down to the poor.

LAND IS NOT ENOUGH

Although the federal government settles thousands of peasants on small farms every year, many abandon settlements, unable compete against larger established players without additional infrastructure and supplementary financial support.

Marxist groups such as the MST landless movement has close ties with the left-leaning government of President Luiz Inacio Lula da Silva, which worries many medium and large farmers.

The groups have been quiet in recent months. Political analysts say they agreed to lay low leading up to the October municipal elections in Brazil, but are expected to launch new land seizures, as they did earlier in 2004.

"Settling people on farms is a federal program. We in the state governments don't have a budget for this. Unfortunately, neither does the federal government," he said.

"It's not going well where the settlements are being set up. People have to make a living and this is hard on the frontiers when there is no strategy for investing or sufficient credit for them," Pereira said.