August 14, 2006

 

Brazil's soy farmers to meet agricultural minister on auction changes

 

 

Brazilian soy farmers and industry representatives have scheduled a meeting Tuesday (Aug 15) with Agricultural Minister Luiz Carlos Guedes Pinto to propose changes to the government-held soy auctions in order to stimulate more trading, a spokeswoman for the Mato Grosso soy producers association (Aprosoja) said Friday.

 

In recent weeks, volumes negotiated on the six government soy auctions have slumped to just over 30 percent of total volume offered, after initial auctions sold for over 90 percent.

 

"Producers would like the trading companies to participate in the auctions so that they can get a better price," a spokeswoman said.

 

In recent weeks, however, soy crushers and trading companies alike have vacated the government auctions, as they fret about paying producers the full, subsidised price of soy purchases up front, even while waiting until next year to receive the government subsidy.

 

The new proposal would have the government accelerate its subsidy payback program or allow trading companies to pay just the spot price to farmers after they buy the product. The companies would then pay the subsidy after the government doles it out to the buyers starting in January, the spokeswoman said.

 

"It does not matter to us if we receive a part of the value now and the rest in January," said Rui Prado, the president of Aprosoja, in a report in local Agencia Estado wire. "Companies are without cash flow at the moment and can't pay us the full cost."

 

Soy farmers will also ask the government to omit other bureaucratic clauses that make it difficult for traders to get reimbursed, the spokeswoman added.

 

Brazil's Vegetable Oils Producers Association (Abiove), jointly proposed the government meeting alongside Aprosoja, the secretary general for Abiove, Fabio Trigueirinho, confirmed Friday.

 

"The auctions aren't functioning adequately at the moment and that's why we're asking for the meeting," he added.

 

The government launched the soy auctions earlier this year after the country's soy farmers--who are suffering from a deepening debt crisis--staged month-long protests, blockaded roads and barricaded ports. They complained soy prices were too low for them to meet credit obligations, raising input costs, and shrinking export margins due to a climbing real against the dollar.

 

Representatives of Brazil's National Commodities Corp, who oversee the government soy auctions, will also be at the meeting.

 

Brazil is the world's second biggest soy producer and exporter, after the US.