COMMODITIES-ARGENTINA: Soya, Undisputed Leader Among Farm Exports

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Aug 3 1998 (IPS) - Argentina is still famous worldwide for its beef and cereals, but both have been overtaken by soya as the South American country’s most important export crop.

This year, soya production has surpassed all expectations, according to Alberto Rodriguez, general manager of the Chamber of Oil Industries of the Republic. The 18.5 million tonnes harvested surpassed the original forecast of 16.5 million and was more than double the 1997 figure.

Despite floods – which, however, did not affect areas under soya cultivation as much as they did the cotton-producing regions – and an international market on which strong competition and the Asian crisis drove prices down, income from soya amounted to about 5.5 billion dollars, accounting for 20 percent of Argentine exports.

Argentina is the world’s third largest producer of soya after Brazil, which produces 30 million tonnes, and the United States, with 70 tonnes. However, Argentina and Brazil head the list of countries that export edible oils in general.

“The United States exports soya beans, but in terms of oil and protein flours, it consumes almost all that it produces,” explained Rodriguez. At the beginning of this decade, Argentina began concentrating on developing its own industry, and today it sells oil and flour to more than 70 countries worldwide.

An industrial complex built in the province of Santa Fe, northeast of Buenos Aires, has become the main center in the world for the food industry: it houses more than 15 national and transnational factories with the latest technology and private seaports.

Rodriguez said the key to this concentration is proximity to production areas and an easy route to the sea through the Parana river. Brazil, Argentina’s main competitor in oil sales, has higher transportation costs because of the distances that separate the mills from the oil factories, and the latter from the seaports.

With the new investments in factories and advances in fertilization, pest control, biotechnology and continuous rotation, along with the opening up to the international market and the elimination of taxes that discouraged exports, soya production in Argentina has grown 80 percent since 1990.

This trend has been accompanied by an increase in the worldwide consumption of eggs, pigs and chickens, all of which require inputs of protein-rich flour. Therefore, even though most consumers are unaware of the presence of this oil crop in their daily lives, the demand per inhabitant has quietly increased from 6.5 to 26 kilogrammes in the past few years.

Rodriguez feels the outlook for the so-called soya “boom” is good, in terms of the possibility of continuing to obtain foreign markets and to increase local production by advancing the agricultural frontier and expanding cultivation of this crop.

“Despite the current situation, which is not good for Southeast Asia, the countries of that region are still our target because they have large populations and very low levels of consumption of flour and oil at this point,” said the business leader.

“That is why we would be happy if they would increase their levels to even half the rates that they have been in the past years,” he added.

At the local level, Rodriguez believes that Argentine producers concentrated in the area known as the Pampa Humeda, in the middle of the country, have still not reached the limits of soya production. He still sees major opportunities in the future with the transformation of lands now devoted to other grains or to cattle.

“Argentina has enormous potential for growth in soya production in the northwest and in western Buenos Aires province, if cattle producers gain in efficiency and start using less land to produce more and utilize the extra space for soya production,” he said.

But soya, which this year represented more than 27 percent of Argentina’s harvest of more than 65 million tonnes, also faces challenges posed by the United States, Japan, Mexico and Iran.

Rodriguez stressed that the United States and Japan tax imports of oil and flour at 20 and 33 percent, respectively.

Meanwhile, Mexico, which used to purchase 90 percent of its oil from Argentina, is offering more advantages to the United States, its new provider since the signing of the North American Free Trade Agreemnt (NAFTA).

Another blow to the industry was the conflict between Argentina and Iran, which blocked the sale of 400,000 tonnes of soya oil and 500,000 tonnes of soya flour to that country.

Iran was Argentina’s second largest client, but a legal inquiry into the alleged participation of Tehran in a bombing in Buenos Aires has affected commercial ties between the two countries.

Even with these difficulties, soya is still the shining star of local farm production and the current leader in exports. But it will still be a long time before the traditional beefsteak is replaced by the soya plant as the symbol of the Argentine economy.