Posts Tagged ‘argentina’
A Canadian company has had a wholly-owned subsidiary in Argentina for 20 years.
The subsidiary is active in the cattle raising sector. You joined the parent company in
1992.
A. Your CEO gives you your first mandate in 1992: to conduct an analysis of the foreign exchange risk for the entire company and to explain to him or her which kinds of foreign exchange risk the company is exposed to.
The important data available to you are:
Cattle is sold in Argentina in pesos;
Grain which is fed to the cattle is bought in Argentina and the supply is met by
means of a long-term contract of 20 years, in US dollars.
B. Given the optimism that accompanied the pegging of the peso to the US dollar, your boss is planning, shortly after you were hired, to grow the Argentine subsidiary. Your boss is targeting the other markets in South America, mainly Brazil, to sell cattle. Your boss is, however, open to other suggestions. What would you recommend? Why?
Organic farming has become one of the most favoured options for the production of safe, highly nutritious food and long-term sustainability. The market for the produce from organic farms is growing, especially as consumers have become more aware of food-safety issues, environmental preservation and wildlife protection.
Organic farming is practiced in over 100 countries worldwide, and, as of 2007, there were over 26 million hectares managed under organic farming techniques. Of this total, Australia had the biggest share (43.3%) with its 11.3 million hectares; Argentina was a distant second with 2.8 million hectares.
From its inception, the position of organic farming has been against large-scale, chemical-farming agriculture. The debate between organic farming and chemical farming is far from settled. Some of the points involved are described below.
Natural controls of insect pests and diseases
An organic-farming system does not use synthetic chemicals, including inorganic fertilisers, insecticides, fungicides and herbicides. To keep pests at acceptable levels, natural pesticides may be used. Chemical-farming advocates say natural pesticides are crude and are actually improved upon by synthetic pesticides, and that the distinction between the two is arbitrary. Organic-farming advocates point out that pest control in organic farms is achieved by encouraging the presence of predators and natural enemies of pests, following crop rotation, using cover crops, and growing healthier plants; natural pesticides (such as soybean oil, rotenone and pyrethrum) are only used as the last resort.
Research from the early 1990s has shown that organic farms have lower populations of insect pests than conventional farms or that there is little difference between them. A comprehensive analysis by Letourneau and Goldstein (2001) who studied organic and conventional tomato farms in California showed that there was no difference in the abundance of plant-eating animals (herbivores) but the organic farms had higher abundance and a wider variety of natural enemies to pests that affected the crops, which led to better pest control.
Soil ecology
Proponents have always asserted that the organic system maintains high levels of biological activity and fresh organic matter in humus, thus promoting soil health. Numerous studies investigating various aspects of soil ecology, including the physical, chemical and biological properties of soil, and its ecological processes such as nutrient cycling, in organic and conventional farming systems have confirmed the claims of organic farming advocates.
Some of the most significant studies involved the organic and conventional farming trials in Switzerland (called DOK trials), which covered a 21-year period. One study by Siegrist et al. (1998) found that organic plots had significantly greater earthworm biomass, soil aggregate stability, and population diversity than conventional plots. Another study by Mäder et al. (2000) showed colonization of beneficial fungi was 30-60% higher among plants growing in organic farming systems, which implied that organic systems had a greater capacity to achieve plant-fungi symbiosis.
Nutrient loss
Many studies have shown that nitrates leach out at slower rates in organic farms than conventional farms. For example, Eltun et al. (1995) found that nitrate runoff in conventional cash crop systems in Norway was at least two times higher than in organic cash crop systems. Among farms producing forage crops, loss of nitrates in organic systems was 36% less than that in conventional systems.
Soil productivity
The basic criticism against organic farms is that yields are lower than conventional farms. The Swiss DOK trials found that the organic systems had 20% lower yields than the conventional systems, but it was also noted that fertilizer consumption in organic systems was 50% lower. Organic farming advocates point to the economic costs of conventional farming systems such as the cost of environmental clean-up and the depletion of non-renewable energy resources; in contrast, organic systems avoid these hidden costs.
Another factor that contributes to lower yields in organic farms is the presence of weeds. Several researchers have found higher weed densities and weed biomass in organic farms compared with conventional farms. On the other hand, researchers have also reported the presence of rare and endangered weed species on mature, decades-old organic farms, which may indicate a contribution to encouraging plant biodiversity. It may not favour short-term economics but it does support long-term ecological concerns.
Keywords: soil ecology, organic farming, sustainable farming, conventional farming, soil health, most profitable form of farming.
Argentina Agribusiness Report
The Argentine agricultural industry is characterised by strong production and large-scale mechanisation and enjoys a position as one of the world’s foremost agricultural exporters, with the industry contributing over US$16bn to GDP. With GDP forecast to increase by over 50% to 2012, the potential for agriculture to further drive growth in the country is enormous.( http://www.bharatbook.com/Market-Research-Reports/Argentina-Agribusiness-Report.html )
The country’s per capita meat consumption is the highest in the world, while its competitiveness in beef production means that the industry plays a major role in political and economic decisions. In our Argentina Agribusiness Report Q109, we look at how the local agricultural sectors have responded to various internal and external supply and demand issues. For instance, high tariffs and bans on beef and grains exports have unleashed the wrath of the country’s farmers, prompting fears of domestic supply disruptions and further unrest in these sensitive times. In light of such potentially destabilising aspects, we foresee the industry performing healthily to the end of our forecast period, although hiccups along the way are expected.The year 2008 has been one in which increasing numbers of local farmers took up soybean production. Between 1994 and 2004, it is estimated that the total of land under soybean cultivation grew by 236%, which reflects global demand for biofuels as environmentally sustainable energy sources. Consequently, Argentina has become a top soybean producing and exporting nation, reaping the benefit from its vast expanses of land. It is now predicted that over 60% of Argentine farmland is now used for soybean cultivation. However, the incompatibility of soybean production with other crops has led to massive reductions in available land for grains and beef.
Although beef production is forecast to grow by 8.1% over the period of our outlook, the reduction in pastures has led to a growing number of US-style feedlots, where the animals are fed with soybean meal. This ‘feedlot beef’ is perceived to be of lower quality than the grass-reared beef for which the country is renowned and may in future reduce value sales, even as volume sales rise. Export bans and taxes have exacerbated a situation where beef producers have felt that President Cristina Fernández de Kirchner has undermined their efforts to prosper from foreign markets. This has led to strikes and blockades disrupting local supplies. While the beef market experiences a period of turbulence, poultry and pig production has been thriving off the back of soybean and corn surpluses, enabling a potential reduction in beef demand and supply. We forecast poultry production to increase more than any other livestock, while pork consumption is likely to have a greater impact on farmers’ rearing decisions
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In 2001, after entering WTO, China implemented the promise to liberalize the trade of agricultural products and cancel the import tariff barriers of soybean, wheat, rapeseed and peanut oil. Therefore, soybeans poured into China and the amount kept increasing year by year.
In 2008, Chinaâs import of soybeans amounted to 37.436 million tons, a jump of 21.5 percent compared with that of last year. From January to March in 2009, the soybean import saw a year-on-year increase of 30 percent to 10.15 million tons. Soybeans were imported mainly from U.S, Brazil and Argentina.
Since the latter half of 2008, Chinaâs import price of soybean has kept a continuous drop, the same case with the international soybean price since the last third of February in 2009. Due to these factors, the soybean price in Heilongjiang has decreased by 40 percent from RMB 6100/ton in July, 2008 to RMB 3700/ton in April, 2009.
China is always the only country that plants the non transgenic soybeans and Heilongjiang is the main soybean-producing area in China. Soybean is also the important source of farmersâ income. More imports of transgenic soybeans and fewer exports of non transgenic soybeans have affected the bread-and-butter issue of farmers and may lead to the extinction of the local soybeans in Heilongjiang.
Market in China pays more attention to the low price, rather than the safety of food. Therefore, the imported transgenic soybeans and soybean oil have monopolized the market in recent years. Nowadays in China, 70 percent of the oil processing plants are foreign-owned enterprises and joint ventures while 80 percent of soybean pressing capacity is dominated by food multinationals.
At present, the soybean import sees no downtrend. On the contrary, it is predicted that the import will amount to over 40 million tons in 2009.
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Based on the database, Interviews and research methods from China Research and Intelligence, CRI analyzes the development and opportunities in this industry clearly.
www.shcri.com – In April 2009, China’s soybean import volumes were 3.71 million tons, up by 55.2% year on year. According to the previous statistics, the accumulative soybean import volumes reached 10.15 million tons in the first quarter of 2009 in China, increased by 30.4% year on year. Since the latter half of 2008, with the outbreak of international financial crisis, the soybean futures price in Chicago was dropped sharply. There was no exception for the soybean price in China and the soybean farmers suffered from serious hits. From November 2008, China began to carry out the government purchase soybean policies, which formed the high price. Under the circumstances of trade recession in the globe, mass soybeans flew into China at low price, making the monthly soybean import volumes in China keep over 3 million tons for successive five months.
The competitions between Chinese soybeans and the imported soybeans have spread to the major soybean producing area-Heilongjiang. The soybean oil and soybean dreg market in the domestic market in the major producing areas have been occupied by the genetically modified products. The domestic soybean price is 60 to 80 USD higher than that of the imported soybeans, leading to many processing enterprises with soybeans as the raw materials stop producing or retrain from producing in droves because of no money to be made in Heilongjiang.
In the first quarter of 2009, over 80% of the imported soybeans were from America, and the left were from Argentina and Brazil, most of which from above mentioned countries were the genetically modified soybeans. Compared with the domestic soybeans, the imported soybeans occupy the absolute advantages regardless of the price or the oil yield. There is less and less space left for the domestic soybeans in the field of soybean oil processing. By contrast, the domestic soybeans are low in the oil contents, unfavorable for the oil processing, but rich in the vitamin contents, which will have bright prospects in the soy sauces and soybean products.
In 2001 before entry WTO, China had already absolutely opened up the soybean market. The four largest multinational grain giants, including ADM, Bungay, Cargill and Louis Dreyfus, began to enter China gradually, which gradually occupy the domestic soybean market through the genetically modified soybeans. The multinational enterprises have controlled 80% of the soybean sources of the imported soybeans and 70% of the actual soybean processing capacity. According to the statistics in 2008, there were about 100 large oil processing enterprises in China, and over 60 enterprises were merged or held by the foreign funded enterprises. The multinational grain dealers have permeated into various soybean fields, such as planting, trade and circulation etc.
In Chinese grain systems, the soybean is only one fully connected with the international market. In China, people regard the soybeans as the economic crops instead of grain crops. Due to the long industry chains, more deep processing steps and more added values, the soybean industry attracts special attentions of the foreign funds from planting to processing.
Source: China Research and Intelligence
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Based on the database, Interviews and research methods from China Research and Intelligence, CRI analyzes the development and opportunities in this industry clearly.
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