S15, Ep 3 | The Brazilian Midwest

Bruce's Brazilian business partners run the state of Mato Grosso and the town the company is headquartered in. So while he fights endless pushback to his pipeline project in Iowa, business in Brazil is booming. This season is a collaboration with the Intercept Brasil. You can get the show in Portuguese on their feed as well, and companion stories at: https://www.intercept.com.br/

Transcript

Amy: [00:00:00] Last summer, we went to the Brazilian state of Mato Grosso to get a better feel for Bruce Rastetter's Brazilian partners. One of the first things we wanted to understand, because it's at the center of their US operations too, is how they're handling land in Brazil.

Ricardo da Costa Carvalho: So there are the Franz brothers, Marino Franz and Paulo Franz here, as we can see, and Miguel Vaz Ribeiro.

Amy: Ricardo da Costa Carvalho is an indigenous rights activist with the NGO Abraçao Amazonia Nativa, or OPAN. They recently did a survey in Mato Grosso identifying those who are illegally occupying indigenous lands. When we visited OPAN's offices, he showed us a map. On the map, he pointed out the names of the people who illegally own private [00:01:00] properties that overlap with the Batalao indigenous territory, including the ones you heard there, Miguel Vaz Ribeiro and Marino Franz, Bruce Rastetter's Brazilian business partners.

The Batelão belongs to the Kawaiwete people, also known as the Kaiabi. The Kaiabi were expelled from the region during the government's colonization processes between the 1940s and 1960s. It was part of that westward expansion that we talked about in the first episode. Much of this land was sold at low prices or just invaded by farmers from the south and southeast.

There are many farms officially registered on Batalao indigenous land. The  Kaiabi are now trying to get that land back. And landowners like Miguel Vaz Ribeiro and Marino Franz are making that especially difficult, because they're not just wealthy farmers. They also work in government.

Ricardo da Costa Carvalho: They are politicians in the [00:02:00] region, which we see as a major obstacle for the Caiabi to win this fight for territory.

Amy: As an American, it would have been easy for Bruce to start talking to the Franzes and Miguel Vaz Ribeiro, even to buy some land from them without doing a background check. But he didn't just buy land from them. He went into business with them. Their finances are co-mingled. They've taken on debt together.

And these guys are well-known in Mato Grosso, not just for their businesses, but for their involvement in various entanglements with the legal system.

I'm Amy Westervelt and you're listening to Carbon Cowboys, the story of how the ethanol kingpin of Iowa became the king of corn in Brazil and what it tells us about the limits of technology and markets to solve the climate crisis. This season is a collaboration between The Intercept Brazil and Drilled.[00:03:00]

Helio Moraga: What is 70,000? What is 70,000 to Marino, man? For us it's money, but for him-

Amy: This audio is from a hidden camera recording supposedly created by Lucas do Rio Verde businessman Hélio Moraga. He's trying to negotiate a bribe from Marino Franz of the Franz brothers. According to Hélio, he got the money from Franz and recorded a second video of himself thanking Marino Franz for it.

Helio Moraga: Hey, Marino. How's work going? But Mr. Marino, I won't take up too much of your time. I just came to thank you because I received the 70,000 from that deal we made.

Amy: 24 officials from Lucas' administration, including Marino Franz, have been charged with administrative misconduct. The video is now available online, and the Mato Grosso Public Prosecutor's office has stated that the case is still pending.

[00:04:00] Meanwhile, the scandals continued. At the end of Marino Franz's second term as mayor of Lucas in 2012, he and Miguel Vaz Ribeiro, his business partner, were accused of issuing more than 800 false invoices in the names of small rural producers. Mato Grosso's Department of Finance has not disclosed the results of that investigation.

In November 2014 came another scandal.

News Archival: Operation Promised Land was launched simultaneously in the states of Mato Grosso, Santa Catarina, Pernambuco, and Rio Grande do Sul. The federal police are investigating crimes involving invasion of federal lands, document fraud, and environmental crimes. 52 arrest warrants were served. Three former mayors in the interior of Mato Grosso were arrested.

Amy: By this point, Marino Franz was the former mayor of Lucas do Rio Verde. He was accused of being part of a scheme [00:05:00] that moved around $200 million through the illegal sale of plots of land in Mato Grosso. Marino Franz only ever spent a week in jail.

He was granted a writ of habeas corpus and eventually the federal court decided to close the investigation against him, citing a lack of evidence. But the Franz brothers and Miguel's problems continued after getting into business with Bruce, too. In 2017, Agro Cerrado, Miguel Vaz's Amapá company, was fined a million dollars for deforestation.

That fine remains active, awaiting payment or appeal. In 2025, Vaz was fined again, this time almost $600,000 for planting cotton and corn within the Batelão indigenous land in Mato Grosso. None of these scandals ever seem to stick, thanks mostly to the political capital these three, Marino and Paulo Franz and Miguel Vaz Ribeiro, have amassed in Lucas.[00:06:00]

For almost 25 years, the mayor's office there has been controlled by these guys. First, they built one of the original industrial agriculture companies in the state.

Marino Franz: When I started Fiagril, I brought my brother-in-law to work with me. He made the best chimarrão in town, and he liked bars. So in a place where there are a lot of young people, where there are no phones, no radio, where no one knows anything, news spreads through the bars. I would say to Lino, "Lino, you make the chimarrão, talk about soccer, and talk a little bit about women, and leave the rest to me."

And that's how we created Fiagril.

Amy: This quaint family story with the inspirational piano in the background is being told by Marino Franz in a promotional video for the company Fiagril. He started Fiagril in Lucas do Rio Verde in 1987, during a fourth [00:07:00] wave of wealthier settlers who came to explore the region from the south and southeast of the country.

Marino was 24 at the time, but had been living in Lucas since he was 18. Like their counterparts in the US, lots of industrial ag guys in Brazil like to pretend to just be folksy farmers down the street. Marino describes the creation of Fiagril, which sells seeds, fertilizers, and pesticides like an artisanal farm stand at the local farmer's market.

But in 2024, Fiagril had gross revenues of $700 million. It has 28 branches in four states, four warehouses, more than 500 employees, and Chinese and American shareholders. Paulo Franz, Marino's younger brother, arrived in Lucas in 1995, and now together they own around 40,000 hectares of land in Mato Grosso, equivalent to around a quarter of the city of São Paulo.

Miguel Vaz Ribeiro: [00:08:00] I met Marino Jose Franz when he was already a businessman. Then I became friends with Marino, a business relationship, so to speak. And then in 1996, I decided to leave the company I was representing and became a partner at Fiagril.

Amy: This is Miguel Vaz, the current mayor of Lucas, in the same promotional video.

He and Marino created an important alliance at Fiagril, which would later branch out into other businesses, including FS, with the help of their foray into local politics. In 2001, Marino Franz became deputy mayor of Lucas under Otaviano Pivetta. He graduated to mayor in 2005, where he remained until 2012.

In the 2012 election, Fiagril donated more than half a million reais, around $98,000, to the campaign of Otaviano Pivetta, who became mayor of Lucas for the third time, with none other than Miguel Vaz as his deputy. In [00:09:00] 2021, it was Vaz's turn to become mayor of Lucas. That's when the video of the bribery scandal came to light.

It didn't seem to make a difference, though. Vaz won with nearly 60% of the vote. After the break, how they put that political power to work for Bruce.

Remember when Bruce Rastetter first went to Brazil, he was licking his wounds after a big land deal in Tanzania went south. He needed a sure bet, and the brothers Franz and their pal Miguel could deliver it.

Bruce Rastetter: I've always believed that Brazil will be the other country in the world in particular that supplies the majority of the world's food going forward and food production.

It's the country that most readily accepts U.S. technology outside of the U.S. And so began traveling there four and a half, five years ago, decided that we would form a fund to buy a single [00:10:00] farm, take our time.

Amy: That's Bruce speaking at a Brazilian-American Chamber of Commerce seminar in 2016.

Bruce Rastetter: Our partner in Brazil is Fiagril, a large supply input company to farmers.

So we continue to look forward to kind of walking before we run in Brazil and took time to get through that government process, but also looking forward to corn ethanol, which we think will be a significant complement to sugarcane ethanol as biotechnology takes place in Brazil.

Amy: Paulo Franz, the young Franz brother, is a big fan of the United States, and of Bruce in particular. His Instagram account currently has 10 posts. Three of them feature Bruce. Another features the US national anthem being played during an American football game at Iowa State University, where Paulo says he studied, and where Rastetter was on the Board of Regents for years.

A fifth [00:11:00] post features Paulo himself with a satisfied smile, holding a pizza and a Coca-Cola with an Iowa State University baseball cap. Here's Paulo talking about his love of the US on an agricultural podcast.

Paulo Franz: I've always been enthusiastic about the United States, right? Like it or not, in college here in Brazil, you learn about irrigation or fruit growing, and they use the example of California.

And there's the influence of music, movies, right?

Amy: After buying land from the Franzes, Bruce agreed to go into business with them and their partner Miguel on a corn ethanol company they called at the time FS Bioenergia. F for Fiagril, S for Summit. In August 2017, Bruce, the Franz brothers, and Miguel Vaz inaugurated their first corn ethanol plant in Lucas do Rio Verde.

The event was attended by none other than then President of [00:12:00] Brazil, Michel Temer, and his Minister of Agriculture, Blairo Maggi, a partner in one of the largest soybean producers in Mato Grosso.

Blairo Maggi: I made sure that President Michel Temer came here so that he could see and help us publicize, and even lobby official agencies to also start financing this type of investment, something that still does not happen today.

Amy: Words and promises from Agricultural Minister Blairo Maggi during the factory's inauguration ceremony. In 2019, things got even better for Bruce and his Brazilian business.

Mauro Mendes: Hello, my friends. I just received an important visit here in our office from the FS group, which is investing in ethanol here in the state of Mato Grosso. Here with us are Marino Franz, one of the investors, and Rafael, the company's CEO. Today, they already operate an ethanol plant in the city of Lucas.

They're building another plant scheduled to open in January 2020 in the city of Sorriso. And right [00:13:00] now they're starting a new plant there in the city of Nova Mutum. We also discussed the tax incentive program that will be important for the growth of the sector, which will revolutionize agribusiness here in our state.

Amy: That's former governor of Mato Grosso, Mauro Mendes, in a video he posted to his Facebook page in July 2019. Marino Franz and FS CEO Rafael Abboud are by his side. FS built three more plants in the state after that announcement.

The Sorriso plant began operating in 2020, followed by the Primavera do Leste plant in 2023. The fourth plant was announced in 2025 and is under construction in the city of Campo Novo do Parecis. The fifth is planned for the municipality of Querência. The Mato Grosso government has given its support to the company since at least 2019, as Governor Mauro Mendes said in his video.[00:14:00]

FS secured more than $300 million in tax breaks from the state since then. In 2022, Bruce was made an honorary citizen of Lucas do Rio Verde and also received one of the state's highest honors, the Commendation of the Order of Merit of Mato Grosso. But land and political power wasn't enough. Bruce and the guys were in the carbon business, too.

Here's Paulo Franz.

Paulo Franz: We have studies on our farm that prove that corn grown on top of soybeans sequesters more carbon than an entire standing forest. This is serious. This is very new.

Amy: To be clear, scientists say the exact opposite. A mature forest stores 50 to 100 times more carbon than a corn-soybean field or a soybean-corn field.

It doesn't really matter, though. It sounds good, and these guys have enough political power that no one really questions them. Thanks to Bruce's powerful Brazilian [00:15:00] partners, he's been able to get things going more easily here than back home. In December 2025, three months after Brazilian government officials visited Bruce in the US, the Brazilian Development Bank released $78 million to fund FS's carbon storage project in Lucas do Rio Verde.

The company has now rebranded to FS, Fueling Sustainability.

Alexandre Silveira: We are planting a new seed, the seed of the fuel of the future. It will generate more than 260 billion in investments in agriculture and the biofuel chain. The fuel of the future puts Brazil at the forefront of the new economy, the green economy. That's more than 40 billion in new investments and more than 25 billion for the creation of sugarcane fields, corn fields, and transportation.[00:16:00]

Amy: This is Brazilian Minister of Mines and Energy, Alexandre Silveira, speaking during the ceremony to sign the Fuels of the Future Bill into law in October 2024.

The law sets out a set of initiatives to promote low-carbon transportation as a way to reduce greenhouse gas emissions. It incentivizes a gradual increase in the percentage of ethanol mixed in with gasoline, provides a legal framework for carbon capture and storage, and encourages the research, production, and sale of so-called sustainable aviation fuel.

The expansion of ethanol, sustainable aviation fuel, and carbon capture and storage are also the only things Trump saved from Biden's climate policy, the Inflation Reduction Act. The Fuel of the Future Act triggered a substantial shift in FS's fortunes. With the increase in demand for ethanol and gasoline, in the 2024 to [00:17:00] 2025 crop year, the company saw its net revenue grow by 32%.

After posting a loss of almost $100 million just two years ago, today FS has net profits of over $200 million.

Rafael Abud on podcast: Brazil's been doing important institutional work in recent years to promote biofuels and increase blends, yeah? And now we have the Fuel of the Future program that implemented E30, which further expanded the market, right?

Amy: Rafael Abud, CEO of FS, is the public face of the company in Brazil. He's the one you'll usually see being interviewed by the press. In this interview you just heard, given in 2025 on a business podcast, he's talking about the increase in corn ethanol consumption in the country.

Rafael Abud on podcast: Corn ethanol already represents about 25% of Brazil's ethanol [00:18:00] market.

The other 75% comes from ethanol made from sugarcane. If you take what you already have in terms of plants under construction and projects that are really moving forward and will start operating in the next two or three years, by 2028, at least 40 to 45% will already be contracted, yeah? In other words, the people watching us don't even know it, but they are fueling up or will very soon be fueling up with corn ethanol.

Oh, totally. Everyone already fuels up with corn ethanol in some way, right?

Amy: To support the ambitions of corn ethanol producers, the Brazilian government has approved public funding of more than $600 million into expanding the corn ethanol industry over the past six years. FS alone received more than $200 million during that period.

Heloisa Borges: The well you drilled was a success story, even a learning experience for the regulatory [00:19:00] agency. Please correct me if I'm wrong.

Amy: This is Heloisa Borges, director of oil, gas, and biofuel studies at The Energy Research Company, linked to the Ministry of Mines and Energy in Brazil. She's talking to Daniel Lopes, vice president of sustainability and new business at FS.

They're on a panel, and they're discussing a carbon capture and storage project that FS is building in Lucas do Rio Verde. FS contacted the National Agency of Petroleum, Natural Gas, and Biofuels initially in 2022, requesting authorization to conduct studies on wells in the Paresis Basin in Lucas for the purpose of carbon capture and storage.

The license was granted just three days after they made the request. However, this raised questions within the permitting agency itself, with some officials pointing out that the license was very broad and did not explicitly state that the company's ultimate [00:20:00] goal was carbon capture and storage. At the time, there were no regulations in the country at all governing carbon capture.

There still aren't. It's still being figured out. It was the Fuel of the Future Act, passed in 2024, that set the mandate of creating those regulations. So after being quickly approved, FS's initial permit for its carbon capture project was suspended. To get around that, a government official advised the legal department of FS to amend the company's articles of incorporation to align with the proposed activity, and it worked.

The government reinstated the permit to FS, and drilling went ahead even without a regulatory framework.

Fabiana Augusta: That's completely absurd. What the civil servant did is totally unacceptable. He can say [00:21:00] that this is the rule, this is how it should be, and you don't meet this requirement. But he can't suggest that the company do something to comply with the rule.

Amy: That's Fabiana Augusta, professor of public law and director of the Brazilian Bar Association.

The Brazilian agency denied that a recommendation was made to FS to amend its articles of incorporation. However, we obtained emails in which three different codes and descriptions of economic activity were suggested by the agency to FS. FS's plans for this project are still underway. In September 2025, some public managers had their travel expenses paid by an association of corn ethanol entrepreneurs to visit successful carbon capture and storage projects in the United States.

That was the visit you heard about in episode one. Among the projects they visited was Bruce [00:22:00] Rastetter's Midwest Carbon Express pipeline project, which hasn't even started construction yet. It was supposed to be operational by 2024, and they're still waiting to start building.

Rafael Barros Araujo: FS is promoting regulation, pioneering prospecting, and even drawing on the experience of its partners in the United States.

And Summit Carbon Solutions is undertaking a major project to become a large CO2 concentrator. Summit Carbon Solutions is pioneering. The pioneer serves as a model for regulators to act upon. And together with these observations in other markets, the ANP will be able to regulate here in Brazil.

Amy: Rafael Barros Araujo is a technical consultant at Brazil's Energy Research Office who participated in the trip to the United States in September 2025, the one we heard about in episode one.

Three months after that visit, FS would [00:23:00] receive its $78 million loan from the Brazilian Development Bank to start burying its carbon in Lucas. Favoritism, luck, or just a window of opportunity, as business people say?

Michel Temer: So when I come here, Marino and Bruce and everyone, when I come here, I actually come with the feeling that Brazil is thriving and trusts what we're doing.

No one invests if they don't know that later on they will make a profit. They'll have more than legitimate financial advantages.

Amy: These words from then Brazilian President Michel Temer at the inauguration of FS in Lucas do Rio Verde in 2017 seem prophetic. Bruce and his partners marketed the plant's opening as the launch of a sustainable future for the country and the world.

But in the nearly decade since, all they've managed to do is turn Lucas do Rio Verde into a testing ground for questionable green solutions and skyrocket their profits in the [00:24:00] process. Remember what agricultural consultant Kory Melby said last episode about what Bruce and his partners at FS think about sustainability?

Kory: They don't give a shit about any of this stuff. They're just taking opportunity that's in front of them.

Amy: Lucas' future doesn't look promising to everyone. For a lot of locals, it's actually pretty bleak. And what's protecting this corn ethanol boom in Brazil is a thin green veil that separates the haves from the have-nots.

In this next episode, we're gonna take you on a visit to Lucas do Rio Verde and show you the other side of Bruce's business in Brazil.

We reached out to Bruce Rastetter, Harold Hamm, the Franz brothers, Miguel Vaz Ribeiro, and all Summit companies and Brazilian government agencies mentioned in this season for comment and have incorporated any responses we received throughout the season. Carbon Cowboys: Cowboys of the [00:25:00] Cerrado is a collaboration between Drilled and The Intercept Brazil.

The show was reported and written by Felipe Sabrina and me, Amy Westervelt. Our editors are Audrey Quinn in the US and Alicia de Souza in Brazil. Our senior producer and sound designer is Martin Zaltz Austwick. Audio production and sound design in Brazil by Marcia Reverdoza and Felipe Mux. Theme song and original music by Eric Terena.

Additional music by Martin Zaltz Austwick. Our engineer is Peter Duff. Artwork for Drilled is by Matt Fleming. US fact-checking from Naomi Barr. Brazil fact-checking by Estudio Frontera. Our First Amendment attorney is James Wheaton with the First Amendment Project. We are also proud members of Reporter Shield.

Big thanks also to Andrew Fishman, president of The Intercept Brazil. Drilled is distributed by Pushkin Industries. Huge thanks to the team there, including Greta Cohen, Eric [00:26:00] Sandler, Grace Ross, Morgan Ratner, Owen Miller, Kira Posey, Jordan McMillan, Brian Schreberneck, and Jake Flanagan. To hear the Portuguese version of this series, head over to The Intercept Brazil's site or search for The Intercept Brazil's podcast feed wherever you listen to podcasts.