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Brazil blames U.S. soybean subsidies for low prices

(Sept. 4, 2001 – CropChoice news) – The Brazilian government has had it with the low prices that the country’s soybean industry is receiving for its record harvest, none of which has been genetically engineered. Brazil is pointing the finger of responsibility for record low soybean prices at U.S. subsidies and already has taken the issue to the World Trade Organization.

The way Brazilian government officials see the situation, the U.S. policy of reimbursing farmers for money they lose during the production process has cost Brazil nearly $1 billion.

Carlos Nayro Coelho, Brazil's special spokesman on agricultural policy, told Reuters: "Without subsidies, which guarantee to cover the difference between production costs and lower market prices, U.S. farmers would not be able to grow as much soy and international prices would recover from a drop in supply."

Key to remember is the fact that Brazil, which disallows the cultivation of transgenic soybeans, is producing more of the beans per hectare than is the United States, where transgenic varieties last year accounted for 63 percent of the soybean crop.

According to Reuters: "Analysts in Brazil and the United States agree that U.S. farmers will have increasing difficulty competing with Brazilian soy on the international market.

Inexpensive and seemingly endless tracts of land coupled with staggering productivity and cheap labor will likely push Brazil past the United States as the world's largest soybean producer within a decade."

Indeed, U.S. productivity has grown 4 percent since 1996 compared to a 25-percent increase in Brazil. This seems to put the lie to Monsanto’s claims that its Roundup-resistant soybeans mightily increase productivity.

The average cost to produce a hectare of soybeans in the United States in 1999 was $615, with productivity of 2,322 kg per hectare. Meanwhile, in Brazil, it cost $427 to produce a hectare of beans in 1999, with productivity of 2,367 kilograms. The cost plummeted in 2001 to $315 to produce 2,720 kilograms per hectare.

Brazilian officials expect to hear soon from the World Trade Organization whether it will convene a panel to assess whether U.S. soybean subsidies violate the 1994 Uruguay Round.