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Soy rules in Latin America as China, Europe beckon

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(Globalpost/GlobalPost)

In row after neat row, lush green plants cover the fertile plains of Brazil, Argentina and Paraguay -- soybeans destined for hungry markets in China and Europe.

The green fever stems from this: soy is a great, cheap source of protein. And the stuff is here to stay. Cows make more milk when they are fed soybean meal, for instance.

The Chinese go after soybean sprouts, which they then turn into oil or meal, while Europe wants the meal directly, for use as feed for poultry, cattle and pigs.

Prices have quadrupled over the past dozen years or so, making the Brazil-Argentina-Paraguay region the world's soy powerhouse. Their harvest in 2013 was at an all time high.

Brazil alone produced 81 million tons this year, matching that of the soybean pioneer, the United States, according to figures from the US Department of Agriculture. The last US soybean harvest was hit by drought.

"The benefit is that soy has the same nutritional value as meat but it is a vegetable. Per hectare, it is the cheapest protein to produce," said Marc-Henry Andre, author of a book entitled "Argentina, Brazil: the El Dorado of Agrobusiness."

At the Chicago Mercantile Exchange, thanks to burgeoning demand soy prices have shot from $100 a ton in early 2000 to more than $500 now, said Argentine economist Luciano Cohan.

China imported 60 million tons of soybean sprouts in the 2012/2013 season and plans to take another 70 million in 2013/2014.

The soy is genetically modified but no one objects "because the benefits for the State are such that this is seen as a positive technology," Cohan said.

Environmental concerns

"Soy now has a central role in agriculture. A cow fed with soy clearly produces more milk than one fed with hay," said French agronomist Marcel Mazoyer.

Conservation groups are not thrilled, however.

They worry about cattle raising and wheat growing being neglected as farmers jump on the soy bandwagon.

Other problems are deforestation, aerial fumigation with pesticides and pollution of groundwater, they say.

Beekeepers are buzzing too: they say their insects are being denied flowers for making honey as agriculture grows obsessed with the green leaves of soy.

Soybean growing requires little manpower, so it has a social cost as well. Many small-scale farmers have given up agriculture and moved to sprawling slums in big cities.

But others are fighting the relentless advance of soy and trying to hold on to land they have inherited from ancestors.

In Brazil, soybean is the country's third largest export (11 percent of the total), after minerals and oil.

Brazilian farmers have been flocking to Paraguay to settle there and grow soybean, causing its production to quadruple in one year. A word has been coined to describe them -- 'brasiguayos' -- or Brazilian Paraguayans.

Paraguay, a country of seven million sandwiched between Brazil and Argentina, is the world's sixth largest producer and fourth largest exporter, after Brazil, the United States and Argentina.

Argentina did not post a record harvest in 2013. But soy accounts for 25 percent of its exports and is the driving force in the country's economy. Its 2014 harvest is forecast to be a record 53.5 million tons.

Argentine producers, who are generally very wealthy, complain about the taxes they pay -- 35 percent on soy exports. So they planted less than they could have. It is said that Argentina emerged from economic crisis in 2001 because of rising prices for soy.

South America is posting record harvests and they are expected to fatten in the 2013/2014 season.

Gustavo Grobocopatel, an Argentine nicknamed the "king of soy,", says growth will continue another 10 or 15 years before stabilizing.

Mazoyer reckons production will double in the next 50 years.

The world is developing fast, with people in emerging nations now in a position to afford meat. So demand for it and, thus, soy to feed the cows, will rise.

At the rate things are going, he said, "we will have to deforest part of the Amazon."

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http://www.globalpost.com/dispatch/news/afp/130917/soy-rules-latin-america-china-europe-beckon