Brazil & Southern Cone - November 2010 (ISSN 1741-4431)
Southern Cone soybean alliance
Brazil's agriculture minister, Wagner Rossi, made headlines on 22 October when he declared after a ministerial level meeting at the Consejo Agropecuario del Sur (CAS) that member countries were discussing plans to establish a strategic soya and oilseed producer's alliance in order to deal jointly with international buyers, notably in Asia. The CAS is integrated by Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay.
Rossi's comments sparked speculation about the possibility of the South American countries creating an Opec-like organization that would control over half of the world's soybean production. CAS member countries led by Brazil, Argentina, and Paraguay (the second, third, and sixth largest producers, and the first, third, and fourth largest exporters) produce on average a total 111.5 million tonnes of soybeans per year; and export approximately 83.2 million tonnes per year, accounting for 59% of the world soybean trade.
During the XIX CAS meeting at the Inter-American Institute for Cooperation on Agriculture (IICA) in Santiago, Chile, the member countries discussed a number of agricultural policy priorities in the region. Among these was the outlining of strategic alliances under the Red de Coordinación de Politicas Agropecuarias (REDPA) policy coordination scheme in order to carry out unified international agricultural negotiations.
However, as Rossi quickly pointed out, the Opec comparison is inaccurate because the CAS countries do not have any plans to manipulate market prices, but rather they want present a unified front against major international buyers such as China that generally manipulate the regional market forcing the South American countries to compete with each other in order to obtain a lower price. As Argentina's agriculture minister Julian Domínguez explained, “It's about unifying our supply platform". Moreover, CAS is a product of the relatively ineffective Latin American Integration Association (ALADI); and it is not clear how REDPA will work or whether the CAS has the capacity to effectively enforce compliance to the identified regional policies. In this context, the Mercosur member countries are notorious for being unable to agree and enforce orchestrated regional policies.
- The Argentine agriculture ministry forecasts a record harvest of 103.5m
tonnes in 2010-2011, of which over 50% is soya.