Growing more prosperous

SUN JOURNAL

Soybeans: As production of the legume expands rapidly, Argentina courts the danger of a monoculture economy.

April 19, 2004|By Reed Lindsay | Reed Lindsay,SPECIAL TO THE SUN

CORDOBA, Argentina - The weight of this nation's crisis-prone economy rests heavily on a little round legume packed with protein.

Soybeans have rapidly swept across Argentina's vast plains, replacing cattle and other crops to become the nation's top export. In the process, they have helped spur an economic upswing two years after Argentina fell into the worst depression in its history.

"All of those soybeans are mine, all the way to the mountains, and to the edge of the city," says Jose Maria Borleto, as the scythe-like black teeth of two lumbering harvesting machines hack through dried soybean plants. "Agriculture wasn't a business for my father. But it is for me. Whenever I have spare cash, I rent more land."

A third-generation farmer, Borleto grows soybeans on most of the 5,000 acres he rents west of the city of Cordoba, Argentina's third-largest city. He is one of an emerging number of businessmen driving an unprecedented boom in the production of soybeans, which had been on the margins of a beef-obsessed country.

Argentina's once-formidable industry is still in ruins, and widespread unemployment in sprawling urban slums has scarcely diminished, but the small towns that dot the sparsely populated Pampas are bustling.

Soybean exports are expected to top $10 billion this year, twice that of two years ago. This influx of foreign currency has boosted the economy, which grew 8.7 percent last year - more than any other Latin American nation - after a record 11 percent contraction in 2002. Taxes on soybean exports, meanwhile, have been a godsend for the deeply indebted government.

Prospects are looking even better as farmers harvest their crops this fall - soybean prices have nearly doubled in the past year, soaring to their highest levels since 1988.

"You take away soybeans, and the Argentine economy falls like a piano," says Victor Trucco, president of AAPRESID, an organization that represents the nation's largest soybean farmers. "We're talking about $10 billion and $2 billion in export taxes. That's a lot of money anywhere, but in Argentina, it's absolutely huge."

The growth in soybean production is a result partly of increased demand, especially in China and other Asian nations, where soybean meal is used in feed for livestock. Argentina, which is the world's third-largest soybean producer behind the United States and Brazil, more than tripled its exports of soybeans and soybean oil to China between 2000 and 2003.

Soybeans have become the favored crop among Argentine farmers not only because of this steady demand, but also because they are relatively inexpensive to cultivate, thanks in part to two cost-saving innovations - the use of genetically modified seeds and the adoption of a technique called direct planting.

With the latter, farmers skip the labor-intensive process of tilling, instead sowing seeds directly into the soil after a harvest. That keeps the soil rich with nutrients, but it also creates propitious conditions for weeds. As a result, direct planting began to be widely accepted only after 1996, when multinational agro-giant Monsanto introduced genetically modified soybeans designed to resist the company's glyphosate-based herbicide. Now farmers can blast weeds with herbicide without worrying about damaging their crops.

Those who have most profited from the new technology are not traditional farmers so much as city-based businessmen, who rent tens of thousands, even hundreds of thousands, of acres and contract out harvesting, pest control and other work. Equipped with cellular phones and sport utility vehicles, entrepreneurs such as Borleto have built big agro-industrial operations that have begun displacing the region's gauchos and small-scale farmers.

"The farmer who lived in the countryside, who did his own work, is something that is being overcome," says Trucco. "Not to say that he no longer exists, but he is no longer as common, nor is he as profitable or as efficient."

According to Pablo Orsolini, vice president of the Argentine Agrarian Federation, more than 100,000 farmers have disappeared since 1990, due in large part to the currency's one-to-one peg with the dollar throughout the past decade. The overpriced peso hurt the export-oriented agricultural sector, pushing many farmers into bankruptcy.

In January 2002, the peso was devalued - disastrous for the urban poor and unemployed, and a boon for those farmers who were still afloat.

But a growing chorus of economists, agronomists and environmentalists are warning of the dangers of the soybean bonanza, which is occurring to a similar degree in neighboring Brazil, Paraguay and Uruguay. Never before has Argentina's agricultural production been so concentrated in one crop, they say - a tendency that is favorable only so long as soybean prices remain high.

From sugar cane to coffee, monoculture economies have historically spelled ruin in Latin America, as boom has inexorably been followed by bust.

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