Which territorial embeddedness? Territorial relationships of recently internationalized firms of the soybean chain

Abstract

This contribution focuses on the territorial relationships established by companies of Argentinian origin that have extended their scope of action to other MERCOSUR countries (mainly Brazil) in the first stages of the soybean chain. Although some features of grain production and particularly of soybean enable a temporary commitment of these firms with local spaces, they develop some kind of foundations as a necessary condition to operate. A relevant side of their forms of territorial embeddedness is the strong selectiveness of local spaces and actors promoted by their behavior. Some local actors are in fact included; in the long term, however, their capacity to capture value is constrained since they are not able to control the terms and conditions of their incorporation.

Keywords:

• soybean production
• flex-crops
• sowing pools
• seed firms
• Argentina
• Brazil

Acknowledgements

The author would like to thank key informants for their support during field work, and the BRICS Initiative for Critical Agrarian Studies which provided a small grant for carrying out research. She would also like to give thanks for the suggestions and comments of two anonymous reviewers of JPS. The usual disclaimers apply.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹However, national companies have a greater weight in Argentina than in Brazil, since they control over 30 percent of exports of flour and soybean oil (Wesz Jr. 2014a).

²The latter defines the type and speed of growth that a soybean cultivar will have. Maturity groups are defined numerically from 00 to VIII.

³In Argentina, most of the soybean is produced near the ports (within a distance of around 200 to 300 kilometres). Although storage facilities are located in small- and medium-sized towns, crushing facilities are geographically concentrated (Regunaga 2009). The metropolitan area of the city of Rosario in Argentina holds 83 percent of the installed capacity of the oil industry. Over 75 percent of agribusiness exports are shipped through its port terminals, and 90 percent of soybean exports (Bisang and Anllo 2014). The area also handles soybean production coming from Paraguay through the Parana River.

⁴The other components are no-till farming (direct sowing) and glyphosate.

⁵These large production firms also develop upstream agreements with trading and crushing companies to better manage logistics and to implement forward sales for risk management (Regunaga 2009).

⁶It should be pointed out, however, that the increase in leasing is driven not only by sowing pools but also by other farmers of the country who expanded their operations through this mechanism, mainly in grain production.

⁷In other areas of Argentina, another type of phenomenon has arisen associated with the dynamism of export agriculture. The fact that some peasants do not hold legal titles on the land they inhabit opened the door to different ways of gaining control of land that range from voluntary purchase to violent evictions. A recent study by the Ministry of Agriculture documented existing conflicts regarding land tenure (Bidaseca et al. 2013) and indicated that almost 80 percent of them involved holders (poseedores), namely people who, while they have been occupying their plots of land for decades, do not have legal titles to them. The Argentinian Civil Code recognizes the possibility of acquiring property rights by those who have lived on the same land for more than 20 years, and made improvements on it. But the acquisition of these rights requires a Prescription Trial, a procedure not always available to small farm holders and peasants. There have been, however, some recent institutional innovations – such as the approval of the 27,118 Law on ‘Historical Reparation of Family Farming’ in 2014, which includes the suspension of eviction trials for three years.

⁸This is a deeply controversial issue in the Argentinian literature, with well-known perspectives stressing the long-lasting importance of the landowner class based on the property of land (see Basualdo 2010).

⁹These firms used most of their profits for horizontal growth through leasing greater amounts of land. However, some of them have also invested in vertical integration activities and, to some degree, in the acquisition of land (Murmis and Murmis 2010).

¹⁰One of these lead firms, which operated in 240,000 hectares in Brazil in 2010/2011, profited from the situation of indebtedness of some producers to buy large tracts of land (Wesz Jr. 2014). The latter implied a change in its business model. Gras and Sosa Varrotti (2013) argue that this strategy was facilitated by the introduction of foreign capital in its shareholding structure, and was associated with the interest of institutional investors in land due to the rise in the prices of commodities.

¹¹For instance, Los Grobo operated 86,000 hectares in the 2011/2012 campaign in Argentina and reduced them to 45,000 in 2012/2013 (Infocampo, 20 to 27 March 2015). El Tejar reached nearly 300,000 but only operated 30,000 in 2013. It also moved its headquarters to Brazil (La Nación, 18 April 2013).

¹²One of these lead firms reported in previous years 400 leasing contracts, 3800 service providers, 49 storage plants and 1004 workers (Los Grobo 2011).

¹³As stated for other countries with a strong tradition in grain production (Sommerville 2013), farmers may benefit from the rapid appreciation of land parcels associated with a dynamic agricultural sector, but this simultaneously constrains their ability to expand their operations.

¹⁴From a purely technical standpoint, the production of seeds for cultivation involves various stages that require different skills and scales (Anlló, Bisang, and Stubrin 2011): the development of new genetic material, the multiplication and processing of the seeds (drying, cleaning, classification and bagging), storage and commercialization. These activities can be carried out by the same agent (through vertical integration) or outsourced.

¹⁵According to Trigo et al. (2009), the Cerrado region – an area covering approximately 204 million hectares of land (or 24 percent of Brazil's entire land area) – has an estimated 40 to 50 percent under productive use.

¹⁶According to Wesz Jr. (2014), the states of Mato Grosso do Sul, Goias, Mato Grosso, Bahia, Amazonas and Piauí, which together held 25 percent of the processing capacity of the country at the beginning of the 2000s, grew to 45 percent in 2009.

¹⁷The company estimated that 38 percent of the seeds sown in Argentina involve Plant Breeding Rights. In Brazil, 60 percent; in Uruguay, 100 percent; in Bolivia, 65 percent; in Paraguay, 40 percent.

Additional information

Notes on contributors

Clara Craviotti

Clara Craviotti is a research fellow of the National Council of Scientific and Technical Research (CONICET) and a professor at the Master in Agrarian Social Studies of FLACSO-Argentina. She is a sociologist with a PhD in geography (University of Buenos Aires). Her current research interests are the delocalization and relocalization dynamics of agri-food and the changes in the agrarian structure of the Southern Cone countries, with a focus on family farming. Email: [email protected]