April 27, 2006

 

Brazil's soy farmers press government for price guarantee

 

 

Brazilian soy growers in Mato Grosso want the government to guarantee a minimum price for their soybeans, at least to cover the cost of production, but government officials say that's not possible.

 

Brazil's Agriculture policy director Ivan Wedekin said there was insufficient money to go around to guarantee a price minimum to cover production costs of soybeans--Brazil's biggest agricultural commodity.

 

"There is not the slightest chance that the Brazilian government will buy soy," Wedekin said in the Wednesday (Apr 26) edition of Estado de Sao Paulo newspaper.

 

Mato Grosso, Brazil's top soy-producing state, is expected to produce more than 15 million tonnes of soy in the 2005/06 harvest. National crop estimates are put between 53.5 million and 55.7 million tonnes.

 

Actually, soy already does have a price minimum guarantee on the record books for all of Brazil, but it is so low, it does not come close to covering the cost of production in today's values, said David Brew, a soy analyst at BraSoja, a farm market research and information firm in Rio Grande do Sul, Brazil's third largest soy-producing state.

 

Minimum price guarantees are roughly US$6.60 per 60-kilogramme bag, according to BraSoja. Meanwhile, production costs average US$13.50 per bag in Mato Grosso and only slightly less elsewhere, according to Fabio Meneghin, a soy analyst at agribusiness consultancy, Agroconsult.

 

Soy farmers like to note that two federal laws--Article 187 of the constitution, made in 1988, and Article 85, the Land Statute of 1964--that both guarantee "prices compatible with the cost of production".

 

"The only problem with that is that the law has been amended 200 times, at least, and soy was about a third of the size it is now in 1988 and did not even exist in 1964," Meneghin said.

 

A weak US dollar has hurt Brazilian soy farmers for the second year in a row, as expenses in the local currency continue to rise above and beyond the dollar value of the soy they sell to world markets.

 

"The dollar and the international soy prices are pretty much where they were back in 2001, but what's happened? It's like making the same money you made five years ago, only now you have five kids. Soy farmers are faced with a choice--invest your money more wisely next year, or sell your land," Brew said.

 

Farmers in Mato Grosso have taken other measures. Roadblocks of three major highways continue into their third day. Trucks moving all agriculture products--from soybeans to fertilisers--are being blocked by tractors, pick-ups, and protesting farmers.

"We want the government to guarantee production costs and not just talk about it," said Antonsio Galvan, president of a farm union in northern Mato Grosso and owner of over 2,000 hectares of soy fields. Galvan insists the government guarantee the cost of production for soy, as the government does with some basic grains such as rice and beans.