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ABSTRACT
Chinese agricultural investments in the Southern Cone and the Brazil-China soy-meat complex are playing a pivotal role in the international reordering of the contemporary food regime. China's neo-mercantilist strategy, as exemplified by COFCO, carries elements of both continuity and rupture with this process. With an assertive yet flexible strategy, COFCO has adapted to China's internal requirements, the specificities of host countries, the geopolitical tensions with the US, and global competitors' corporate power. COFCO's strategy reflects the successful Chinese integration into the capitalist world system and the pursuit of a self-reliant food security policy by setting its own terms for global agribusiness engagement.
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Notes
1 The notion of neomercantilism, which dates back to the critique of classical liberalism by thinkers such as Alexander Hamilton and Friedrich List, is employed in food regime literature by Belesky and Lawrence (Citation2019) and McMichael (Citation2020) to analyse the Chinese agrifood strategy based on protection and control of the domestic market and internationalisation of domestic companies. Economic nationalism and national security concerns present in the ‘going out’ and BRI strategies, as well as in China’s food security policy, can be grasped by this interpretation. The key argument is that in the current juncture of food regime transition, rather than relying exclusively on the ‘neoliberal market rule’, state intervention has been increasingly deployed to secure and guarantee direct access to global food, feed and fuel supply chains through foreign direct investments.
2 For example: Pritchard (Citation2009) sees the collapse of the WTO’s Doha Round as the crisis of the second food regime and questions the very existence of a third food regime; Pechlaner and Otero (Citation2008) argue that a ‘neoliberal food regime’ emerged alongside the diffusion of biotechnology; and Burch and Lawrence (Citation2009) see in the 2008 twin financial and food crises the deadlock of a ‘financialised food regime’ enabled by the diffusion of new information and communication technologies.
3 For example: the intense financialisation of land, agriculture and food-related activities (Isackson Citation2014) and concentration of corporate ownership and control (Clapp Citation2019); the spread of food retail revolution (Arboleda Citation2020) and nutrition transition across developing countries (Otero et al. Citation2018); the upsurge of global land grabbing (Edelman, Oya and Borras Jr. Citation2015) and expansion of ‘flex crops’ (Borras Jr. et al. Citation2015); the repositioning of food and agriculture within an ecological political ontology (Moragues-Faus and Marsden Citation2017) and the emergence of new social movements engaged in food activism, both through politics and markets (Holt-Giménez and Shattuk Citation2011); and the continuing role of the state, even during the neoliberal era, both promoting rural development and food security policies and supporting the expansion of agribusiness (Escher Citation2021).
4 For comparison, pork consumption per capita in the US and Brazil in 2018 was 23kg and 13kg, respectively (OECD-FAO Citation2020).
5 Our notion of ‘Brazil-China soy-meat complex’ rests on McMichael’s analysis (Citation2013) of world agri-food markets as articulated by distinct ‘importing poles’ and ‘exporting poles’, as well as on Weis’s (Citation2013) conceptualisation of the ‘industrial grain-oilseeds-livestock complex’, which explains how agri-food landscapes around the world are increasingly likened to ‘islands of concentrated livestock within seas of monocultures’.
6 As the level of indebtedness of the whole economy reached a proportion of 230% of GDP by 2015, the return rates of investment projects became progressively lower. Thus, even though state investments in productive capital – which most borrowings were used for – safeguarded China from the negative impacts of the crisis, it also raised the volume of capital stock in the economy, aggravating industrial overcapacity (Kroeber Citation2016).
7 China’s total soybean imports in 2020 closed at US$ 38.8 billion (just below the US$ 39.6 billion in 2017), with Brazil accounting for 64.2% (compared to 65.1% in 2019) and the US for 27.4% (compared to 18.9% in 2019) of this total (GACC Citation2020). This indicates that the effective impact of the US-China Phase One Trade Agreement, which came into effect in February 2020, was quite positive for the US but not so harmful for Brazil, while the Covid-19 pandemic, strictly speaking, did not impact Chinese demand for soybeans at all.
8 It should be noted that despite the harsh ‘wolf warrior’-style of public statements made by the Chinese Ambassador to Brazil Yang Wanming against the infamous manifestations of Congressman Eduardo Bolsonaro and then Ministers Abraham Weintraub and Ernesto Araújo – fruit of the ideological alignment of Brazilian foreign policy with defeated Trumpism –, the Chinese government, always pragmatic and attentive to long-term relations and the principle of non-interference in internal affairs, did not promote any type of commercial retaliation, even though this case may have created a situation of discomfort and mistrust (Ibañez Citation2020).
9 Nonetheless, with the drop in domestic pork supply, China has become the world’s largest meat importer. In 2020, Spain ranked as China’s first pork supplier, followed by the US, Germany, Brazil and Denmark, and Brazil as its first beef supplier, followed by Argentina, Australia, New Zealand, Uruguay and the US (GACC Citation2020).
10 Asked about the EU pressure to commit to eliminating deforestation in the soy complex, the president of the Brazilian Association of Soy Producers (APROSOJA), who is closely aligned to Bolsonaro, implied that the Chinese market does not care about the environmental issues affecting its main supplier. He stressed that ‘in no way will this affect our business. Our market is Asian. European demand is insignificant.’ (Valor Citation2019).
11 To illustrate: in 2018, soy covered 65% of the total arable land in Brazil, 44% in Argentina, 74% in Paraguay, and 55% in Uruguay, while the aggregate value of the soy complex (grains, meal and oil) in the total agricultural exports accounted for 17% in Brazil, 21% in Argentina, 40% in Paraguay and 7% in Uruguay (FAO Citation2020).
12 Here, it is important to highlight the interconnectedness of the soy complex across the countries of the Southern Cone, for example, through the controversial expansion of Brazilian agricultural mega-firms in Paraguay and Bolivia, and Argentine’s pools de siembra seeking direct and/or indirect control over land, resources and markets in the region (Oliveira and Hecht Citation2016; Wesz Jr. Citation2015; Gras and Hernández Citation2014).
13 Regarding transport and storage logistics, COFCO owns ten port terminals in the four countries (Atomic Agro Citation2019), as well as 22 silos in Brazil, 14 in Argentina and seven in Paraguay and Uruguay (Meyer Citation2018). COFCO’s president in Brazil informed that between 2017 and 2019, US$ 30 million were invested in four silos in Mato Grosso, which will increase its storage capacity by 300 thousand tonnes. He commented that ‘there has been a lot of efficiency gain, and currently there is idle capacity in ports such as Santos (SP), Paranaguá (SP), São Francisco do Sul (SC) and Tubarão (SC), among others. Rio Grande (RS) is an exception, but the situation is much better [than before]’ (Biodiesel BR Citation2019). He further explained that thus far, COFCO has no plans to invest in the ports of Arco Norte (in the Tapajós River Valley, in the Amazon region), as the company has a long-term contract with the waterway transport operator Hidrovias do Brasil. The priority is to invest in the ports of the Southern region. In Argentina, the company also doubled its operating capacity at the port of Rosario (Netnews Citation2020). COFCO is interested in investing in railroads in large soy producing areas in Brazil (such as Ferrogrão and the Cerrado Railways). However, there are few concrete results so far (Oliveira and Myers Citation2020).
14 Alongside the continued Chinese demand, the specialisation of Brazilian exports is conditioned by two other interrelated factors: the exchange rate devaluation, which between January 2002 and December 2014 remained at a monthly average of 2.24 USD/BRL, when it starts to fluctuate, with a constant downward trend, until in March 2020 it extrapolated the level of 5 USD/BRL (BCB Citation2021); and the soy price, which peaked at US$42.8 per bag in September 2012, fluctuating with a downward trend until reaching a minimum of US$ 19.6 in May 2020, when it starts to increase, being above US$ 33 per bag since May 2021 (CEPEA Citation2021). Such conditions led Brazil to export more than 70% of all soy produced in the country since 2018 (see below), when sporadic shortages began to appear in the home market, forcing the importation of soy from the US, with tax exceptions, to compensate for the drop in domestic supply. This has generated speculation in Brazil and elsewhere, which we will not be able to assess here due to space constraints, about the possibility of a ‘new commodity boom’.
15 Throughout 2018 and 2019, about 60% of COFCO’s exports from Brazil and Argentina went to China, while the remaining 40% went elsewhere, showing the great importance of third markets (Trase Citation2020).
16 It is important to clarify that COFCO’s control of soy production in the Southern Cone occurs primarily through value chain management, instead of land purchase or leasing by the company itself for direct cultivation. Such a strategy has already been observed by Wilkinson, Wesz Jr., and Lopane (Citation2016), Oliveira (Citation2017) and Escher and Wilkinson (Citation2019). For further details on contractual transactions between traders, input suppliers and producers involving ‘barter’ relationships in the Brazilian soybean market, see Escher, Wilkinson, and Pereira (Citation2018).
17 As a matter of fact, COFCO established a partnership with the US farm cooperative Growmark Inc. in order to facilitate China’s direct access to US soy imports without depending on the ABCD (Plume Citation2017).
18 COFCO exports corn and wheat, as well as soy and sunflower oil and meal from the four countries, and imports fertilisers from China. In Brazil, COFCO also operates in the coffee, cotton and sugar, ethanol and biodiesel markets, exploring opportunities around the so-called ‘flex crops’ (Wilkinson, Wesz Jr., and Lopane Citation2016).
19 Nonetheless, in the same year, the country exported US$ 12.5 billion in soy oil and meal, with only a tiny portion of that going to China (MAGYP Citation2020).
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Notes on contributors
Valdemar João Wesz
Valdemar João Wesz Junior is Professor at the Latin American Institute of Economics, Society and Politics, Federal University for Latin American Integration, Foz do Iguaçu, Brazil. His research focuses on agri-food systems, rural development and agricultural policies in Latin America.
Fabiano Escher
Fabiano Escher is Professor at the Department of Development, Agriculture and Society, Federal Rural University of Rio de Janeiro, Rio de Janeiro, Brazil. His research focuses on international and comparative political economy, economic sociology, agri-food systems and rural development in Brazil, China, and the BRICS.
Tomaz Mefano Fares
Tomaz Mefano Fares is a PhD candidate in the Department of Development Studies at SOAS, University of London. His research concerns inter-capitalist disputes and political change in the Chinese soybean downstream complex. He participates in an increased scholarly interest in agrarian studies, Chinese studies, critical development studies, and international political economy.