The Political Economy of Agricultural Booms: Managing Soybean Production in Argentina, Brazil, and Paraguay

164 Pages·2017·5.87 MB·English

by  Mariano Turzi (auth.)

The Political Economy
of Agricultural Booms
MarianoTurzi
The Political
Economy of
Agricultural Booms
Managing Soybean Production in
Argentina, Brazil, and Paraguay
MarianoTurzi
UniversidadTorcuatoDiTella
BuenosAires,Argentina
ISBN978-3-319-45945-5 ISBN978-3-319-45946-2(eBook)
DOI10.1007/978-3-319-45946-2
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To mywife Gladys, myonetrue love.Abimopectore
P
REFACE
This book studies the international political economy of agriculture, spe-
cificallyoftheglobalagroindustrialmodelofsoybeanproductionandthe
domestic variations across three national case studies: Brazil, Argentina,
andParaguay(the BAPcountries).
Chapter1introducesagricultureandpresentstheanalyticalframework.
It begins with an empirical, historical background on soybeans and the
worldsoymarket.Itthenproceedstostudyagricultureanditslinkagesto
theeconomy,reviewingthemaindebatesandrecentcontributionsinthe
political economy of agriculture literature. The final section studies the
several trends in global demand that have come together to intensify
competition foragricultural resources andfood products. World demand
for agricultural commodities is driven by four factors (the “four f’s”):
food, feed,fuel, andfinance.
Theinternationalpoliticaleconomystructureofagricultureiscurrentlya
corporate-driven, vertically integrated system of global agricultural pro-
duction.Thisistheresultoftwomutuallyreinforcingtraits:thetechnolo-
gicaltransformationintoagrochemicalsandgeneticallymodifiedseedsand
the economic globalization of grain trading. The two sections review the
supply-sideactorswhohavedriventhisinternationalrestructuringofpro-
duction and trade: chemical and trading multinational corporations
(MNCs). Chapters 2 and 3 focus on the international dimension from
thesupplyside.Thegrowingimportanceofinformationtechnologiesand
biotechnology has led to a dramatic increase in the power of the seeding
companieswithinthesoybeanchain.Thestrategicvalueofauniqueasset—
genetically modified seeds with proprietary traits—has propelled these
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viii PREFACE
companiestoadominantposition.Thepowerofinputsuppliersinthenew
soybeanmodeofproductionhasgiventhemoverridinginfluence,allowing
them to appropriate a sizeable portion of the rents generated along the
chain. The importance of tracing the behavior of these multinational
corporateactorslaysinthefactthattheyhaveexertedtheirpowertocreate
theinstitutionalstructuretogovernthenewresource(geneticallymodified
soybeans). As such, the resulting institutional landscape is a “map” that
exhibitsthemarksofthepowerstrugglesbetweentheactorsinthechainin
theirattempttocrystallizetheirpowerresourcesintothegoverningstruc-
ture,objectifyingtheirpower(O’Donnell1978).Amirrorsituationcanbe
found in Chapter 3 at the level of corporate actors in the trading and
industrialprocessingstage.Distributorsandprocessorshavetakenadvan-
tage of the grain trade liberalization of the last decade to leverage their
position in open markets. They concentrated on supply mechanisms
through the advantages derived from scale and vertical integration. Their
strategies for furthering their position within the soybean chain include
infrastructuredevelopment,financialleveraging,andflexiblesourcing.
Transnationalization is increasingly eroding the relevance of national
frontiers. The mode of production in the soybean chain would be thus
regionalizedaccordingtocorporateincentivesoperatinginaglobaltrend
toward relocation of the different stages of production. Soybeans are
harvestedinParaguay,sentbybargetoBrazilorArgentinaforprocessing,
and sold in Geneva to Asia after headquarter in the USA has authorized
the operation. The geoeconomic pull of the international-level corporate
strategies is reorganizing territorial boundaries, integrating the three
countries into a single regional production structure from the upstream
to the downstream: the “Soybean Republic” (2011). The international
model of agricultural production has empowered chemical and trading
multinational companies. The vertical integration of these two powerful
links of the globalized chain has generated a commanding production
structure.Toconsolidatethis“soybeancomplex”ofproduction,chemical
companies have used their scientific and technological superiority to
advance the sales of their agrochemical products. They have integrated
with traders and processors and leveraged scale advantages to establish
dominant buying positions. Further, they have drawn on their financial
strengthstodictateinfrastructuraldevelopments,thuscreatingapullforce
torearrangetheeconomicgeographythroughtheBAPcountries.Indeed,
theanalysisofthetradinglinkinthesoybeanchainevidencesthatnational
borders were becoming increasingly irrelevant realities. The ascent of an
PREFACE ix
international, corporate-driven model of organization of production is
reshaping territorial realities according to global production demands
andneeds.
But—as Harris (2001) points out—modes of production evolve from
thecontradictionbetweenmeans(materialforces)ofproductionandthe
(social)relationsofproduction.Amodeofproductionencompassesthe
totality of the social and technical human interconnections involved in
the social production and reproduction of material life. The material
underpinnings of social cleavages (Lipset and Rokkan, 1967) in the
agricultural sector are different in each country. These cleavages have
impactedpolicyresponse,generatingspecificnationalpoliticaleconomy
configurations. The reality that international-level stimuli impacted
domestic institutional structures in Brazil, Argentina, and Paraguay is
theexplanatorycoreofthisbook.Themeansofproductionchangedfor
the three countries in a similar way, but the relations of production did
not because conditions on the ground differ significantly in Argentina,
Brazil, and Paraguay. Despite uniformity of the international corporate
actorsdrivingtheprocessofsoybeanexpansion,theendresultswerefar
from homogeneous. They reinforced the existing structures of power
(concentrated landowners) in Paraguay but upset the balance of power
(betweentheurban/industrial/laborcoalitionandtheagriculturalinter-
ests)inArgentina,whiletheyempoweredlocalactors(municipalitiesand
state governments) in Brazil. Results are not preordained by economic
factors—as modernization theory would predict—nor is there evidence
of convergence of processes due to globalization. Each of the BAP
exhibits different patterns of institutional governance of the soybean
chain, and the level of centralization of resource management gives the
basis of comparison among the three case studies. The application of a
comparative political economy analysis reveals rather the ascent of
“Soybean Republic.” National coalitions have limited the convergence
and standardization associated with economic globalization (Guillén,
2009). The end result observed in the case studies of Brazil, Argentina,
and Paraguay—the BAP countries—demonstrates a key role of national
politicaleconomyarrangementsinshapingtheinfluenceoftheglobaliz-
ing “pull” forces. Pressure groups and coalitions have been formed
around agricultural interests, and their relative strength has been the
determinant factor transforming natural endowments in these three
countriesintocompetitiveadvantagesinworldmarkets.Thepreferences
and relative power of actors within these societies—economic and
x PREFACE
political, national and subnational, public and private—within certain
institutional and policymaking frameworks are giving way to differential
patterns.
Chapters 4, 5, and 6 analyze the political economy of producers and
farmers throughout the three case studies. If the global structure condi-
tions explain the why, the comparative political-economic case-study ana-
lysis of domestic political economy structures in Brazil, Argentina, and
Paraguay accounts for the how. The diverse cleavages and institutional
forms throughout the BAP have resulted in specific, non-convergent
modes of production for the same natural resource. In each of the case
studies, the changes in the means of production have created different—
although not exclusive—relations of production. The focus is not on the
agronomic componentof soybean production, but rather on the broader
setofsociopoliticalandsocioeconomicissuessurroundingit.Thisbookis
lessconcernedwiththeincreasingphysicalspaceoreconomicweightofa
cropandmorewiththeexpansionandconsolidationofcontrolstructures
and social relations. The analysis of soybean production is treated as a
heuristicdevicetoexposetheunderlyingbalanceofpoweroftheactorsin
the chain and the way in which they have adapted to and shaped the
institutional structure governing resource production and allocation.
Different institutional settings and governance rules will give rise to dif-
ferent forms of resource administration. This is the guiding question in
thisbook:whathavebeentheeffectsofdifferentgoverninginstitutions(in
Argentina, Brazil, and Paraguay) on the management of a resource and
export product (soybeans). The Brazilian case is one in which local gov-
ernance is much stronger, which has allowed to effectively integrate state
institutions with the resource/sector (coordination). In Paraguay,
although the formal structure is that of a unitary state, the agricultural
sector has achieved de facto decentralization by state capture. Taking
advantageofpowerasymmetriesandweakinitialinstitutionalconditions,
there has been colonization by particular and foreign interests. Finally,
Argentina is a case of centralized institutions exhibiting a conflictive
patternof relations withthe economic sector/resource(confrontation).
Theconcludingchapterreviewsresearchfindingsandposesdemanding
questions for future international political economy research, pressing
publicpolicydilemmas for nation-states.
A
CKNOWLEDGMENTS
I would like to thank Director of the Latin American Studies Program at
the Johns Hopkins University’s Paul H. Nitze School of Advanced
International Studies Riordan Roett for trusting in my subject study and
me.Heisthe“intellectuallandowner”oftheSoybeanRepublics.Norma
González and her support through the Fulbright scholarship were of key
importance aswell.
For the past fifteen years, I have had the honor and privilege of a true
mentorlikeSergioBerensztein.Amongthecountlesspersonalandprofes-
sionaldebtsofgratitudeIowetohim, “sowingtheseeds”ofthisareaof
studyisthe one mostdirectly related to thisbook.
IhavealsohadtheguidanceandpermanentsupportofRobertoRussell.
I am very thankful to Torcuato Di Tella University Rector Ernesto
Schargrodsky and PoliSci/IR Department Directors Catalina Smulovitz
and Juan Tokatlian for giving their vote of confidence. A recognition is
also in order for former Business School Director Juan José Cruces and
MBA Director SebastiánAuguste.
To Palgrave editor Dr. Anca Pusca, who trusted in this project, and to
JuanPablo Luna.inrepresentation ofREPAL(NetworkfortheStudyof
PoliticalEconomyinLatinAmerica).Theyhavedeliveredonthepromise
of promoting new studies in the political economy of Latin America and
welcoming innovations that challenge the conventional wisdom on
socially relevant phenomenon in the region with an open and eclectic
approach.
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