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Spanish version

12-Jul-02

Mercosur: An ag exporting giant that should use its strength

One of the central issues of the industrial and post-industrial age has always been petroleum. World geopolitics have zigzagged in search of this resource during the last half century. Wars, international conflicts, economic crises and great fortunes were created over this resource. Producing nations of black gold have been able to use their influence in transcendent decisions and, in some cases, knew how to take advantage of the power provided by their oil reserves.

However, not only petroleum makes the world go round. Other valuable and indispensable resources exist, including food. One of the most worrisome issues today for world leaders is hunger.

Over the years, the world economic model has defined that the Southern Cone be a supplier of inputs, and Argentina has learned to be efficient in its role in this international context.

Argentina produces many products other countries cannot: grains, beef, honey, fruits, commodities, and in smaller amounts specialties that slowly seduce and conquer strict consumers in foreign countries. But Argentina does not just produce; it does so in such a way that it is currently the world's fifth exporter of agricultural food products.

In a world moving towards globalization, it is necessary to analyze the economic effects on a macro level and if this axiom applies, the Mercosur trade block in which Argentina is inserted has turned into an agricultural food power that must learn to be heard on international platforms, and must take advantage of the power acquired by being one those in charge of "feeding the world."

The last report published by the USDA (United States Department of Agriculture) points out that Mercosur's production of soybean for the 2002-2003 campaign will be larger than that of the U.S. While the U.S. estimates it will harvest 78 million tons of the grain, Argentina and Brazil will reach that number and exceed it with the help of Paraguay and Bolivia (together, almost 5 million tons).

The numbers revealed by the USDA place Mercosur as the main producer of soybean and derivatives, without forgetting that the current tendency indicates a sustained growth of soybean area for the next years.

Half of the animals on the planet are also raised in this part of the world, with the advantage that local rodeos don't suffer maladies such as mad cow disease that already affects Europe and Asia. These factors force the issue: Mercosur members must meditate on the need of joining strengths and focusing goals in order to make known their demands, mainly against the influence of subsidy policies in international markets.

A first step

Recently a meeting was held in the Argentine capital of Buenos Aires with presidents of every Mercosur country –Argentina, Brazil, Uruguay and Paraguay- and also Chile, Bolivia and Mexico. Although speeches spoke of solidarity towards a beaten Argentina, other interesting points were mentioned during the encounter.

The Presidents arrived in Argentina with their ministers and secretaries of Agriculture, and all expressed their rejection towards agricultural subsidies used in industrialized countries. They also warned that they wouldn't allow these measures to keep "pushing agricultural prices towards depression and producers towards poverty."

One of the strongest positions was the one held by the Brazilian Secretary of Agriculture, Marco Pratini de Moraes, who pointed out, "You cannot avoid answering mechanisms of internal and exporting subsidies used by Europe and the U.S. that depress prices of agricultural products."

Pratini de Moraes went on to say, "It is not acceptable to tolerate mechanisms that depress prices and the incomes of our producers," while he underlined the need for demanding an answer from the WTO (World Trade Organization) for this situation that damages the South Cone.

Obviously, critics are centering on the U.S. and Europe, the main subsidizers of agricultural producers, who do so in exorbitant amounts. "They have a double standard for organizing conventions in order to end with hunger and poverty, but at the same time they are causing it through subsidies to products that compete with poorer countries," considered Brazilian Secretary of Agriculture.

After the meeting, the analyses multiplied. Perhaps, one of the strongest phrases was pronounced by Pratini de Moraes. He emphasized that the Mercosur is a producer of agro-food, and that is exactly what it sells. In his words, "If it doesn't protect this source of income that allows us to pay our debts, how will we face financial commitments?"

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