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In Latin America, There's No Business Like Soy Business

Article illustrative image Partner logo Soybean harvest in Brazil

SANTIAGO - The number, $7.9 billion, brings a smile to faces. That number corresponds to the amount of exports from Brazil to China in the first trimester of this year. The joy is reduced a little when you learn that 80 percent of that number comes from only three exports: soy, iron ore and petroleum. And the enthusiasm turns to outright worry when one discovers that the total amount of exports would have dropped 6 percent if it were not for just the soy exports.

It is expected world soy consumption will reach 290 million tons per year by 2019/2020. China is not the only consumer - Brazil is expected to consume nearly 13 million tons by 2020.

The solution to meet this demand has arrived in the form of a new type of soy, that is better adapted to drought and, possibly even more importantly, can grow in salty soil. This new plant will allow the expansion of cultivation into areas that had previous been considered unsuitable. Environmental activists, however, warn that this could lead to a new environmental disaster, just as occurred in central-west Brazil and in Northern Argentina, with the destruction of unique ecosystems.

GM Soy

What farmer doesn’t want a plant that is resistant to drought? In Argentina, Raquel Chang, a biologist and specialist in genetic modifications, used a gene from the sunflower that helps the plant resist drought and transferred it to soy.

It wasn’t an easy task, and involved extensive testing in the fields, but the result was a planet-wide patent on the soy seed that is resistant to drought. The company Chang works for controls the patent and has created a new company, Verdeca, to plant and harvest the soy. Chang says that the modified soy is more productive than regular soy regardless of how much water it has, although it is particularly well adapted to drought conditions. The potential profits from the endeavor are enormous.

Deforestation

Not everyone thinks that the advancements in drought resistance are really advancement. “In 10 years, 10 million hectares of forest have been cut down in the central and north part of the country. Between 70 percent and 80 percent of that was used to cultivate soy,” says Hernan Giardini, the coordinator of the forest campaign for Greenpeace in Argentina. If Verdeca’s seed is adopted widely, then Giardini predicts that “easily 10 million more hectares will be threatened.” He said that although he could understand that the seed might be good for farmers in regions that are prone to drought, forests that were previously saved because they were located in zones not suitable for agriculture, either because of drought or soil salinity, would now be in danger. In theory there should be laws protecting the forests, but in practice the laws and zoning rules can be changed easily.

In Brazil, experts from Embrapa-Soja, another company that is testing drought-resistant seeds, doesn’t think that will happen. The expert explained that drought is mostly a problem in the south of the country, which has been deforested for centuries.

At the same time, some people in the soy industry are starting to see fractures in the golden era they have been experiencing. They had been cultivating a plant with a gene that makes it resistant to herbicide glyphosate, but now that herbicide is working less and less. This leads them to have to develop another variety, and it becomes a never-ending cycle.

High-Altitude Soy

At the same time, investors are looking for new terrain, and looking at Colombia and its hills. “In 2011, we imported 300,000 tons of soy beans and 244,000 tons of soy oil. We need a domestic production of 1.9 million tons of soy to replace all the soy that we import,” said Napoleon Viveros, the executive director of a Colombian agricultural development foundation that is working to promote soy production.

For the moment, Colombia is a pygmy in terms of soy. The country has a lot of potential, but the Free Trade Agreement with the United States threatens to prevent a local soy boom, because it will be difficult to compete with the American soy giants.

At the same time, soy farmers are worried about what happens when the prices fall, and what happens when seed providers get too much market control. Farmers say that global mega-corporations have been buying local seed suppliers and will artificially raise the seed prices when they have total market control. As for the seed suppliers, they are trying to avoid, at all costs, farmers who save their own seeds.

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About this article source Website: http://www.americaeconomia.com/

America Economi­a is Latin America's leading business magazine, founded in 1986 by Elias Selman and Nils Strandberg. Headquartered in Santiago, Chile, it features a region-wide monthly edition and regularly updated articles online, as well as country-specific editions in Chile, Brazil, Ecuador and Mexico.

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