South America's Soybean Revolution
WHY YOU SHOULD CARE
South America is poised to become the world’s soybean supplier, but at what cost?
By Matthew Poindexter
Whether the globe turns its soybeans into oil, flour, sauce, milk, meal or just leaves them raw, there’s a good chance they come from South America. Brazil alone brought 82 million tons to market last year. With new land cultivation, the United States’ fixation with ethanol and a drought in the Midwest, the Amazonian behemoth should become the world’s leader in soybean production in 2014. Argentina, which will sow nearly 50 million acres, joins Paraguay, Uruguay and Bolivia as the other up-and-coming soybean hot spots below the equator. It seems that everything east of the Andes will be in soy sauce bottles soon. In Paraguay, soybean production has skyrocketed, quadrupling in a single year.
Acres of soybeans expected from South America’s top five producing nations in 2014.
The boom is partly due to soy’s decreasing emphasis in U.S. agriculture and its increasing demand in China, where the crop originated three millennia ago. The mid-2000s saw significant amounts of America’s soybean acreage switch to corn, with farmers hoping to cash in on the nascent ethanol industry. Simultaneously, China’s demand for the product increased steadily, leading to bigger and bigger returns on tonnage. Prices are expected to stay high as China suffers its smallest soybean harvest since 1993, due to heavy rains and flooding. That’s good news for South American growers: Nearly 60 percent of all soybeans entering international trade already go to China.
Expected Chinese demand in tonnage for soybeans during the 2013-14 growing season.
But many wonder about the cost of South America’s agricultural supremacy:
- GMO: Monsanto introduced an herbicide-resistant variety of genetically modified soybean to South America two decades ago, spurring the crop’s proliferation despite vocal resistance to GMO foods in many parts of the world. A second-generation seed launched in the 2012-13 growing season.
- Deforestation: Rain forest deforestation in Brazil increased by 35 percent in 2013 over the previous year, with more than a thousand square miles cleared. At this pace, “We will have to clear out part of the Amazon forest,” says agronomist Marcel Mazoyer.
- Pesticides: Widespread pesticide spraying on soybeans concerns health activists in Argentina, who link it to a growing list of illnesses.
- Food security: Perhaps most troubling, soy monoculture is terrible for the global and local food market, say economists. Since soy is raised to the exclusion of basic foodstuffs, the region becomes reliant on other parts of the world to meet basic needs. And the few varietals left are more susceptible to a mass wipeout, via either pest or pathogen.
- Economic impact: Soy requires much less manual labor than other crops, putting many farm laborers out of jobs. Small farmers can’t compete and end up moving to the already crowded city slums. Instead of sending a variety of foods to the local markets, farmers have only soy.
Regardless of the risks, few see the soy boom slowing down, either globally or in South America. If it’s not Asian markets hungry for tofu and soy sauce; it’s livestock owners looking to boost their yields: Cows fed soybean meal produce more milk than hay-fed cows. The need is there. South America’s farmers and politicians must decide what they are willing to give up to fill it.
- Matthew Poindexter, OZY AuthorContact Matthew Poindexter