November 21, 2005

 

ASA Weekly: EU feed producers want to end GM-soy patent right dispute; India expects soyoil imports to increase

 

 

EU feed producers want to end GM-soy patent right dispute

 

European animal feed producers have called on the Argentine government and biotech company Monsanto to resolve their dispute over patent rights on GM soybeans.

 

The conflict centres on Monsanto's efforts to secure royalty payments for the use of its Roundup Ready soy in Argentina. After being consistently rebuffed by the Argentine government, the company recently began filing lawsuits in European courts.

 

These legal challenges aim to give Monsanto the right to charge importers who buy soybeans from the South American country. But European feed producers oppose the idea, saying they should not be dragged into the dispute.

 

"The European feed industry, using up to 10 million tonnes of soybean meal from Argentina annually, has no direct advantage from the presence of residues of herbicide resistant genes in the products they buy," Martin Tielen, president of the European Compound Feed Manufacturers' Federation (FEFAC) told Reuters. "The (European) industry is therefore not prepared to pay for the use of this technology."

 

Tielen said the conflict between Argentine government and Monsanto "seriously jeopardises the market prospects for Argentina as a reliable supplier to the European market worth up to EUR2 billion for soybean meal exports alone."

 

Tielen stressed that the FEFAC position is strictly neutral, but he called on both parties to apply common sense to resolve the conflict.

 

India expects soyoil imports to increase

 

India's Central Organization for Oil Industry and Trade has estimated that the recent revisions to India's edible oil tariffs, which favoured soyoil over palm oil, could result in an 18 percent increase in soyoil imports.

 

Sandeep Bajoria, president of the trade body, said that soyoil imports could rise to 2.3 million tonnes for the year ending on Oct 31, 2006 from the 1.95-million-tonnes forecast for the current year. However, he added that palm oil imports are likely to remain unchanged at 3.2 million tonnes.

 

Since May, New Delhi has lowered the base import price of soyoil by 18 percent to US$513/tonne, while the import tax on soyoil is 45 percent, which is half that of palm oil.

 

This has helped soyoil to take a 40-percent share of the Indian edible oil market over the past year, from 21 percent a year earlier.

 

High transportation costs in Brazil

 

Brazilian soybean and grain farmers enjoy lower production costs than producers do in the US, but many face higher expenses to move their crops to export, says USDA. A recent study by the University of Sao Paulo and USDA compared transportation costs for farmers in the two countries.

 

According to USDA, "Cost advantages for Brazil are clear, but tremendous transportation inefficiencies are often overlooked and these inefficiencies lead to overall costs in Brazil near those in the US."

 

USDA attributes Brazil's high transportation costs to its predominant use of roads to move grain from farms to port. USDA found that "road transportation costs are more than triple those of waterway transport and while waterways represent two-thirds of transport of soybeans in the US, in Brazil two-thirds are transported by road".

 

Between 65 and 70 percent of the transport of grains in Brazil is by roads, USDA says. Most of the roads used in the transportation network have been found to be in poor condition and jammed with trucks during harvests. 

 

USDA cited a recent study by the National Confederation of Agriculture that shows that grain transport loss is roughly US$1.2 billion. 

 

The condition of Brazil's railroad system also is a factor in the high transportation costs. Total rail track has not grown in the past 80 years which has led to an inefficient system with the average rail speed in Brazil only 25 km/hour, compared to a world average of 75 km/hour, according to USDA.

 

Brazil's financial commitment to improve its transportation infrastructure has been inadequate, USDA says. Investments in infrastructure improvements and maintenance are far below what the World Bank recommends for developing nations. Current government investment in roads is only 0.1 percent of GDP compared to 1.8 percent in the 1970s.  

 

Nevertheless, the 2005 transportation budget is US$6.4 billion but still considered much too low, says USDA.

 

In conclusion, USDA found that US soybeans are highly competitive with Brazil. With the highly productive centre-western farm states plagued by these high transportation costs, the overall profitability of the product from these areas is almost even with that in the US.

 

"The high competitive advantages of soybean growers in Mato Grosso over producers in Iowa are lost due to the high cost of transportation," USDA says.

 

Cost of transporting soybeans from US and Brazil to Hamburg, Germany (2005 Q2 costs in US dollars)
¡¡	Davenport, IA	Northern Parana	North Mato Grosso (Via Paranagua)
Truck	7.82	22.82	79.07
Barge	14.67	0.00	0.00
Ocean	32.81	44.84	44.84
Total Transport	55.30	67.66	123.91
Farm Value	226.81	300.04	177.89
Landed Cost at Port	282.11	367.70	301.80
Transport percent of Landed Cost	19.60	18.40	41.06
Source: ESALQ/USP and USDA/AMS

 

U.S. & South America Soybean/Products Balance
¡¡	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	2003/04	2004/05	2005/06	2003/04	2004/05	2005/06	2003/04	2004/05	2005/06
Soybeans	thousand tonnes
Carryin	4,853	3,059	6,954	1,630	2,046	2,181	3,231	2,321	903
Production	66,778	85,013	82,820	33,000	39,000	40,500	50,500	51,000	58,500
Imports	151	126	108	540	530	485	364	470	494
Crush	41,631	46,160	46,810	25,072	27,800	29,100	29,172	28,200	31,026
Exports	23,946	30,011	29,257	6,500	9,800	10,000	19,571	21,830	24,750
Other	3,146	5,073	4,296	1,552	1,795	1,810	3,031	2,858	3,021
Usage	68,723	81,244	80,363	33,124	39,395	40,910	51,774	52,888	58,797
Carryout	3,059	6,954	9,519	2,046	2,181	2,256	2,321	903	1,100
Soymeal	thousand tonnes
Carryin	200	191	155	347	354	560	763	532	200
Production	32,953	36,938	37,116	19,807	21,806	22,900	22,920	22,306	24,465
Domestic use	28,590	30,483	31,116	700	850	950	8,784	8,950	9,450
Net Exports	4,372	6,491	5,928	19,100	20,750	22,050	14,367	13,688	14,673
Usage	32,962	36,974	37,044	19,800	21,600	23,000	23,151	22,638	24,123
Carryout	191	155	227	354	560	460	532	200	542
Soybean oil	thousand tonnes
Carryin	676	488	767	99	74	100	150	93	95
Production	7,748	8,781	8,816	4,513	5,115	5,354	5,258	5,220	5,625
Domestic use	7,651	7,900	8,142	140	145	155	2,710	2,948	3,020
Net exports	285	602	583	4,398	4,944	5,224	2,605	2,270	2,600
Usage	7,936	8,502	8,725	4,538	5,089	5,379	5,315	5,218	5,620
Carryout	488	767	858	74	100	75	93	95	100

 

 

USDA Export Sales (tmt) - Week of 10 November 2005
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Barbados	Soybeans	2.50	4.60		Hong Kong	Soymeal	0.10	3.80
Canada	Soybeans	2.30	52.70		Jamaica	Soymeal	5.10	9.60
China	Soybeans	345.50	2817.80		Japan	Soymeal	48.40	40.90
Costa Rica	Soybeans	35.30	53.60		Mexico	Soymeal	22.10	155.30
Egypt	Soybeans	29.40	218.00		Nicaragua	Soymeal	0.60	10.60
France	Soybeans	1.40	28.90		Salvador	Soymeal	0.20	8.80
Indonesia	Soybeans	57.00	358.10		Saudi Arabia	Soymeal	17.40	61.00
Japan	Soybeans	142.20	408.70		Taiwan	Soymeal	2.40	3.60
Mexico	Soybeans	14.60	830.80		Tunisia	Soymeal	5.00	14.50
Morocco	Soybeans	0.30	38.80		Canada	Soyoil	0.40	5.10
Philippines	Soybeans	0.10	16.60		Hong Kong	Soyoil	0.10	0.30
Singapore	Soybeans	58.00	0.00		Jamaica	Soyoil	0.30	0.40
Taiwan	Soybeans	10.20	382.50		Korea, Rep.	Soyoil	0.10	0.10
Turkey	Soybeans	2.70	162.20		Mexico	Soyoil	0.10	22.40
Venezuela	Soybeans	0.50	5.00
Belize	Soymeal	1.30	1.70		Export Sales Totals (tmt)
Canada	Soymeal	33.50	122.10		Commodity	Outstanding Sales	Accum. Exports	New Sales
Colombia	Soymeal	12.80	17.40		Soybeans	5,146.80	5,800.10	644.80
Dom. Rep.	Soymeal	16.00	10.60		Soymeal	1,345.80	668.30	204.70
Guatemala	Soymeal	33.00	22.60		Soyoil	105.30	29.90	0.80