Soy in check: they warn that leadership in flour and biodiesel is at risk

Argentine soy is under control, because reasons originated within the borders, for some years, and now also for international causes.

In the midst of the economic crisis that affects all activities, the production of oil seeds looks bulletproof at least in the popular imagination of most Argentines. But the production numbers are showing another reality, e The outlook is not encouragingaccording to experts.

Agricultural production is stagnant for 10 years. Strictly speaking, it hit 60 million tons in 2015, but it went back and just finished a harvest of 46 million. In the same sense, industrial transformation has also suffered, e the idle capacity of plants producing flour, oil, biodiesel and other by-products already reaches 40%.

However, the future is more troubling than the present. Not only for the possibility of lowering international prices, which have remained at historic highs for more than a year.

Now it also appears a serious external threat on the horizon, as the United States is promoting a strong development of biofuels and it is expected that in the next few years will offer the world very cheap soybean meal, our country’s main export productand the support of the economy over the past two decades for its contribution of dollars.

This storm cloud landscape was reflected in a virtual speech organized by acsoja (the association of the soybean chain) was held this Wednesday. In that meeting, Luis Zubizarretapresident of the institution, said that the harvest was affected by the “7 plagues of Egypt” and compared the decline of our country with the expansion carried out by the United States and Brazil, among other producing countries.

Moderation of the conference has been commissioned Hector Huergojournalistic director of Clarín Rural who considered the risks to agribusiness and the Argentine economy if the supply of cheap soybean meal grows in the world.

Gustavo Idigorapresident of the Argentine Chamber of Industry of the Argentine Republic and of the Cereal Exporters Center (CIARA-CEC), said that “Argentina has already lost by earning $ 43.5 billion, almost like its foreign debt to the IMFdue to the decrease in production in its agro-industrial supply chain over the past 10 years, according to a recent report by the Buenos Aires Cereals Exchange.

And he specified that while agro-industrial production stagnated afterwards an exemplary development of agricultural productivity and investment in infrastructure, which would allow it to double its current levelscompeting countries continued to grow.

The threat posed by the United States due to its growing biofuel production was detailed by the commodity specialist Ivo Sarjanovic, professor in Switzerland and international consultant. He said that especially in California and other North American states what is called the renewable diesel, based on the recycling of oils. He explained that since this has “an expansion prospect, it is estimated that of the current 2-3 million tons, in 6-7 years About 30 million tons will be needed for that destination and will be taken from vegetable oils. Therefore, since soybeans are only 20% oil, the remaining 80% is flour and will be sold in excess to the international market“.

Huergo has grown “Why is the US push for biofuels not used as an opportunity, a sector in which Argentina has everything to grow?

In this regard, Idigoras argued that theoretically progress towards the energy transition in the world it should be good news, but it quickly listed a number of difficulties. He said in February they offered biodiesel to the Secretary of Energy “to avoid the fuel shortage and the decision is it took 3 months, he arrived late and it’s only temporary ”.

In addition, he stressed that “to gain positions in the world You have to be solid and predictable., two qualities for which Argentina is not recognized in the world “. Therefore, she encouraged don’t waste any more time and work to open the markets exporting with added value “.

It was almost a response to the warning from Fernando Correa Urquizathe young Argentine at the head of the regional oilseeds division of the agro-exporting multinational Dreyfus, who had predicted that “If a new agreement is not generated between agribusiness and the government, soybean industrialization will drop from 60 to 40% and we will be simple exporters of raw materials “, despite having “the most efficient agro-industrial center in the world”although “limited by a state that captures the greatest resources of that production”.

He pointed out that it is an activity that requires a constant flow throughout the year and this is why many countries that did not have crushing plants have installed grinding plants in the various continents. Without going further, he testified that he knew many Brazilian cities that did not exist and have grown hand in hand with agribusiness up to levels of 400,000 inhabitants, as is the case in Palma, in the Brazilian north-east.

To contextualize the situation, Zubizarreta highlighted the disincentive impact of withholdings, which are not applied in Brazil and in Argentina, together with the exchange rate gap, absorb more than half of the international price. And he compared the evolution of production in the two countries. The South American giant went from 75 to 137 million tons (from 28 to 38% of the world total) and in our country the involution was from 49 to 46 million (from 19 to 13% of the world total).

And he explained that “in the last 50 years Brazil has encouraged agribusiness and their poverty went from 44.4 to 24.1%, while in Argentina, dealing with the Argentine table and with an anti-export orientation, the same index went from 5.7 to 40.6% “.

The last shared reflection is that cheaper soybean meal could be an opportunity to produce meat and export more. But, in this sense, the international opportunity must overcome the obstacles of macroeconomics and national politics.