Brazil's illegal fossil trade is thriving. But how can it be controlled when it offers impoverished people a livelihood and supplies academics and museums with valuable specimens? Steve Farrar reports from one of the world's richest fossil graveyards.

The grey time capsule juts from the floor of the pit that Edmar Pereira has hewn deep into the parched hillside. After a few minutes, the 40-year-old Brazilian manages to pull the lump free from an earthy grip that has held it fast for 100 million years.

He announces his discovery and hands reach down from above to help him carefully lift the limestone nodule to the surface.

In the harsh sunlight on the edge of the towering limestone plateau of Chapada do Araripe, the crude, 1.5m effigy of a fish is passed around.

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Buried inside its protective limestone shell is a three-dimensional structure of remarkable beauty - the remains of a Cladocyclus, an extinct carnivorous fish and contemporary of the dinosaurs. It is a scientific wonder. It is also raw material for a clandestine industry thriving in isolated corners of the world such as here in northeastern Brazil.

The Cladocyclus, which lived and died in a lagoon that stretched across what is now the arid interior of the Brazilian state of Cear , has just entered the secret world of the international fossil trade.

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Its appearance brings a broad smile to Pereira's craggy face. The impoverished Brazilian understands little of the marine predator's remarkable past, but he knows that this fish-out-of-time will put food in his family's bellies. Pereira is a peixeiro, a fisherman who casts his line back millions of years to pull fish from one of the richest fossil beds in the world.

By noon, Pereira's fish is locked away in a hut in the tiny village of Cancau, perched high on the side of the Chapada. Sometime in the next few weeks, a battered car will brave the potholed track that climbs out of the nearby town of Santana do Cariri. Pereira will usher the driver into the hut and after a brief chat, he will swap his catch, together with a dozen similar nodules, for a handful of banknotes.

Properly treated by expert preparators, the Cladocyclus might fetch Pounds 5,000 from some wealthy Western collector. The peixeiro will probably get the equivalent of Pounds 6. He knows he is grossly underpaid, but he cannot complain - the whole operation has been illegal and he has already been arrested three times for his activities.

It is a hard life. Stories abound of peixeiros being buried alive in collapsed pits or threatened by the gangsters involved in the trade. But, in a region where unemployment is high and wages low, Pereira knows he is more fortunate than most.

"It does not earn me much, but I really like the work. When I'm digging, I don't know what I'll find - it may be something very beautiful," he says.

An affable man, with a wife and three children, Pereira is proud to be a peixeiro. There are perhaps half a dozen men like him in Cancau, more in Santana and other villages around the 180km-long plateau.

Others also catch fish here. In the limestone quarries, where gangs of men slave in the intense heat prising up slabs of rock for building, fossils ten million years older than the nodules caught by the peixeiros are perfectly preserved.

Francisco de Oliveiro has been a quarryman for the past 19 of his 61 years. The work is back-breaking and barely brings in enough money to keep his family. By keeping an eye open for fossils, he can make a welcome windfall. He once sold a beetle for Pounds 70, more than twice his average weekly income. For de Oliveiro, such fossils are gifts from God. "They were put in these rocks at the time of Noah's flood," he insists.

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Touring the streets of Nova Olinda, the next town to Santana, with David Martill, a palaeontologist from Portsmouth University and a familiar figure in this part of Brazil, we are ushered into homes to view handfuls of fossil-bearing limestone tablets.

We see toothy fish heads, baby cockroaches, insects with coloured patterns on their wings, spiders with glinting eyes and leaves nibbled by still-present bugs. They are like images from a 110-million-year-old naturalist's notebook.

Some fossils have had detail accidentally scrubbed or gouged away, others have new limbs and wings painted on and some are outright fakes, like the miniature fossilised armadillo that was so comical it made even the villagers laugh.

Occasionally, a genuinely superb specimen emerges. One or two seem to be entirely new species, including a delicate mosquito. We are also shown several pieces of much sought after Pterosaur bone. But the best material is held by six brothers, middlemen, who control the trade around Santana, buying specimens from peixeiros and miners and selling them on to dealers in Europe or elsewhere in Brazil.

One of the brothers pops up with unnerving frequency throughout our stay. He visits our lodgings, invites us to his and tours the quarries at the same time as us.

One morning he drives us to an unoccupied building on the edge of Nova Olinda, shows us through a room filled with polystyrene sheets, rolls of tape and cardboard boxes to wrap remains for shipping and into a backroom, where a single bare bulb reveals great stacks of fossils.

Here he pulls a slab from its hiding place. It is a Cretaceous plant, complete with roots, stems and leaves, a specimen of immense beauty and undoubted scientific importance.

He complains business is poor - an opinion echoed by dealers and authorities - but despite driving a Ford saloon that looks as old as the fossils, he seems to be doing all right.

The next day we meet another brother. He leads us through a lounge with widescreen TV into a lavishly tiled dining room. He does not smile. He sits at the table and produces a selection of choice fossils. Another man stands behind him, watching us as we study the specimens. The atmosphere is quietly menacing. The middlemen are well aware they are involved in a criminal activity and are taking a risk talking to us. But, generally, the police do not get involved in the fossil trade. While it is illegal, a loophole in the law makes it difficult to sentence offenders. But there are periodic crackdowns.

Behind the Museu de Fosseis in the city of Crato, 20km from Santana, is a small warehouse. Artur Andrade, head of the local Departamento Nacional de Producio Mineral, unlocks the door. There must be upwards of 10,000 fossils in there, piled waist-high. All have been confiscated.

Then there is the one that got away - a Pterosaur with a 4m wingspan, the most complete yet discovered, which was smuggled out of the country in the early 1990s and ultimately arrived in a German museum. All Andrade's museum has is a photograph.

He can lament the loss, though he is relieved the specimen remained within the scientific community, but he knows getting tough will have little impact.

"Although I know the names of many of the people involved in the fossil trade here, it is difficult for me to watch their activities. It is also dangerous to get in the way of these people," he says. One peixeiro Andrade encountered in a field near Nova Olinda threatened to shoot him dead.

Andrade says the fossils leave the region in trucks, buried under loads of gypsum and limestone. They are driven to cities such as Recife, Rio de Janeiro and Sio Paulo to be sold to tourists or shipped abroad using forged papers and bribery.

"The big people in Sio Paulo contract smaller people here, mailing them pictures of the fossils they want. They then contract the peasants to dig for them," says Andrade.

The European dealer who sold the Pterosaur is apparently a frequent visitor to these parts and often buys from the brothers. He demands only the very best specimens and knows where he can get top prices, most often in Germany and the Far East.

If they are bought by a museum, scientists everywhere can study them. If they go to a private collector, they are effectively lost.

There is a rumour that the remains of a very early bird have been discovered in the area, a find of great importance. But it is thought that the unique specimen has already gone to Japan. Perhaps to a private collection.

The fossil fish from Santana in the Natural History Museum exhibition troubled the 25-year-old Brazilian student on a visit to the UK in 1968. Why, wondered Placido Nuvens, was such a beautiful object prominently displayed in London, when back in Santana there was nothing?

"The fossil came from the rocks I used to play in when I was a child in Santana. I never realised their importance before, but I knew then that it was important for us to keep some of the fossils here in Brazil," he says.

Now 56 and pro vice-chancellor of the Universidade Regional do Cariri (Urca) in Crato, Nuvens has been able to realise his dream and is director of the Museu de Paleontologia, the small but impressive museum he opened in Santana in 1984.

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Upstairs are displays of good quality fossils, including some 19 pieces of Pterosaur, while downstairs a modern laboratory is being built to help scholars study specimens on site during field expeditions.

The museum, with its ambitious expansion plans, is becoming a focus for those who want to see the region better understand its Cretaceous legacy. The fossils here owe their survival to a quirk of geology, protected from erosion by a hard cap of sandstone that formed after the lagoon had been filled with sediment.

Why they are so well preserved is not yet clear, though it is known that they fossilised very rapidly and were subsequently wrapped in cocoons of limestone or sandwiched between the layers of rock.

The Pterosaurs, which probably nested on islands in the lagoon, are particularly impressive. This is undeniably the best place in the world to find them both in quantity - at least 14 separate species have been found - and in terms of quality - some have complete wings and even some soft tissue preservation.

The remains have allowed scientists, including Martill, to start placing the flying reptiles within an ecosystem and to better understand the mechanics of their flight.

Understandably, academics from around the world are enamoured with the Chapada. It is quite possible to study its flora and fauna from imported fossils.

A few, such as Martill at Portsmouth and those from distant parts of Brazil such as Sio Paulo and Rio, make the effort to explore the locale themselves.

While Urca, as the local university, is ideally sited for palaeontology, no one there is qualified to make a serious contribution to the field. It is a situation that Andre Herzog, a chemist who joined the university in February, intends to resolve. "It doesn't make sense that our best pieces always go abroad - we need our own scientific activity here and to establish our own expertise," he says.

Herzog and his colleagues, with the help of foreign academics such as Martill, hope to create a department of palaeontology at Urca that could make the university a world centre for fossil study. They hope this will lead to Brazil retaining more specimens.

Educating the local people is another priority. As well as encouraging students to regularly visit the museum and to give lectures in schools, Urca has opened the Land of the Pterosaurs, a palaeontological theme park near Santana. With the help of Renato Laje, a leading Rio Carnival model-maker, they have built two life-size Cretaceous reptiles - a Pterosaur suspended on wires and a giant fish-eating Angaturama - which have been placed in the scrub. It has proved popular and more dinosaurs will follow.

The fossil trade bothers the local academics and geologists, but they do not want an enforced ban. Instead, they would prefer it to be legalised and controlled. The peasants could retain their incomes and while many specimens could still be sold abroad, the state could step in whenever a scientifically important fossil was unearthed, rewarding the finder and handing the remains over to academia.

Martill, who has dedicated years of his life to studying the region's geology and fossils, and collaborating with European and South American palaeontologists, agrees. In his 16 trips to the Chapada, he has developed unique relationships with the local academics and the peixeiros, and works closely with geologists such as Andrade and Brazilian palaeontologists such as Paolo Brito in Rio de Janeiro.

While he regrets the loss of important specimens to private collections and would like to see the peixeiros better rewarded for their efforts, Martill has no problem with the trade. If there were a legal clampdown, he says, everyone would lose. The peasants would lose their livelihood; the academics access to the fossils.

"No scientist has enough funding for big enough digs to get the really good specimens - it's only the tourist market that drives things forward," he says.

However, there are many in Brazil's palaeontological community who are implacably opposed to the fossil trade. Others want to see the law stop foreign researchers such as Martill acquiring specimens.

. While he has no Brazilian fish or Pterosaurs in stock, the boss of the American fossil company assures me: "I wouldn't think there would be any problem in shipping them as long as they were documented as a scientific specimen." He would probably be able to make good my request for quality Santana fossils to start my private collection in the UK.

A Canadian dealer warns me a Brazilian Pterosaur would cost several tens of thousands of dollars. Yet, he too says he might be able to help. It remains for a representative of the Fossil Company, a firm based in California, to point out: "It is illegal to export fossils from Brazil."

Nevertheless, it seems fairly straightforward getting hold of what you want, as long as you have the money. The right documents can, it seems, be acquired.

Despite the recent Brazilian slump, the international fossil market is thriving and national laws seem unable to control it. Browse the internet and you will find dozens of advertisements for every conceivable specimen, even a few labelled "new species".

Some will end up adorning corporate receptions and executive offices. One fossil brokering firm supplies interior decorators.

It is this side of the fossil smuggling industry that particularly upsets Brazilian palaeontologists such as Brito who bemoan the loss of important information.

"I believe many new species or nice specimens are in private collections only because they are beautiful and not for their scientific importance," says Brito. The sums some people are willing to pay indicate the scale of the trade. In the United States, an internet auction of a Tyrannosaurus rex skeleton in July saw bidding reach Pounds 4.8 million.

The rise of the trade has been accompanied by a rise in associated crime, such as the systematic smuggling of Brazil's fossils. Mongolia, China, the US and Kazakhstan are among the many other nations with similar problems. There has been a corresponding surge in thefts from museums, with important dinosaur bones and fossils taken from several national collections. Many academics in the UK, however, point out that there are honest dealers who get legitimate supplies and that the current laissez-faire system works well. They get to see some remarkable specimens they might otherwise miss.

Academics and fossil traders have long enjoyed healthy working relationships throughout Europe, according to David Polly, a palaeontologist at Queen Mary and Westfield College, London. "In Europe, dealers voluntarily bring interesting specimens to the attention of museums and academics because they have built a mutual credibility," he says.

Yet there is a nagging doubt that not everything that comes into the country is 100 per cent above board. You can insist on receiving the right documentation but is that really an absolute guarantee of a specimen's provenance? Not all of the Brazilian fossils in Britain's museums are likely to have been legally imported - a blanket ban has been in place since 1973.

While money for new specimens is tight, especially in the UK, academics face a dilemma. If a particularly interesting fossil is being offered by a dealer, it could disappear into a private collection if they let it slip through their fingers.

It is a dilemma lost on many in the US, where attitudes towards the trade tend to be tougher. Hugh Genoways, former director of the Nebraska State Museum, speaks for many Americans when he says: "High prices have stripped away the scientific value of these finds and left perhaps only the aesthetic value. They have become merely curiosities for someone's coffee table."

An evocative image perhaps, but scientists such as Martill and Herzog reject the American call for more anti-commerce legislation and defend the purchase of important specimens from dealers by museums.

It is a debate that is going to get much fiercer as the trade continues to grow.

People such as Martill and Herzog argue that theirs is the only solution that gives the curious their coffee-table fossils, the peasants such as Pereira their livelihoods, while ensuring the academics get the significant specimens they need to better understand our past.

Some of the names in this article have been changed.

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