Financial Times, 2015: How soya wealth is changing the Bolivia’s Santa Cruz province

Financial Times, 2015: How soya wealth is changing the Bolivia’s Santa Cruz province

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soya bolivia

Even so, the ultra-conservative religious group in Bolivia’s eastern lowlands is thriving. Struggling to express himself in Spanish, Peters resorts to a virtually extinct dialect of German that survives in a handful of Mennonite communities in the fertile plains of Santa Cruz province to explain the reason for their success: soya.

“This is the most productive farming area in Bolivia,” says Jacob Fehr, the vice-president of the more liberal neighbouring Mennonite colony of Chihuahua, founded 26 years ago. Over the past decade, his community of about 220 families has more than doubled the amount of land they own and farm to 25,000 hectares, largely thanks to the recent boom in commodity prices.

These farmers are on the front line of an agrarian revolution in Bolivia that in recent decades has attracted Japanese and Russian immigrants as well as large-scale investments from Brazil and Argentina. This has driven explosive growth in the economy and population of Santa Cruz province, whose eponymous capital is one of the fastest-growing cities in the world and now the largest in the country, with around 2m inhabitants — nearly a fifth of the national population.

Santa Cruz is the powerhouse of Bolivian agriculture. It represents about 60 per cent of national farming yield, with soya accounting for more than half of the province’s production. With neighbouring Argentina, Brazil and Paraguay already saturated with soya crops, the potential for expansion in Santa Cruz, where much land is underutilised, has led some to see it as South America’s next agricultural frontier.

Such hopes have only been strengthened by the fall in global oil prices, which has forced energy-producing countries such as Bolivia to seek alternative and more sustainable forms of income. With soya alone representing Bolivia’s third-biggest source of foreign exchange after gas and mining, the government has announced ambitious plans to boost the area of land under cultivation from 2.7m hectares last year to 4.5m hectares by 2020.

“There is enormous potential here,” says Gabriel Dabdoub, a prominent businessman in Santa Cruz, who believes the agricultural sector cannot flourish without support from the government to boost productivity levels, which lag far behind the agricultural giants of Brazil and Argentina. But doubts remain as to how committed the government is to promoting agriculture, and what kind. “It is the million-dollar question,” says Dabdoub.

René Orellana, Bolivia’s planning minister, said in an interview that of $48bn in planned public investments by 2020, the government is aiming to invest more than $5bn in agriculture, and about $2.5bn will be spent on building agro-industrial complexes. He emphasised that the investments would be focused on strengthening small producers in the western highlands and non-traditional exports with high added value, rather than the soya farmers of Santa Cruz.

Still, relations between big landowners and the government have improved a great deal since the tense early years of Evo Morales’ presidency. His need to maintain support among his power base, the poor indigenous population in the highlands, led to serious clashes with the more affluent citizens of Santa Cruz, who have always yearned for greater autonomy from La Paz. “We realised that we were not going to get anywhere fighting, so we said, let’s talk,” says Jaime Suárez, a farmer involved in negotiations with the government. Nevertheless, landowners complain that dialogue has yet to translate into action, with bureaucracy posing a particular problem.

Farmers reel off a long list of challenges. Chief among them is legal security, with bitter complaints about government intervention in the export sector. Most also cite the need to improve technology, problems accessing credit, and the land-locked country’s poor infrastructure.

The relentless expansion of Bolivian agriculture has created some of the highest deforestation rates in the world “If we seriously want to open up our agricultural frontier, it will be necessary to grow our agro-industrial sector as well,” says José Llano, who heads the college of agronomists in Santa Cruz. A study co-ordinated by Llano concluded there are almost 2m hectares of good agricultural land in Santa Cruz that lies uncultivated, representing an extra $3.8bn in potential revenues in addition to the $2.2bn that the province’s agricultural sector currently generates.

Reinaldo Díaz, president of the business chamber for soya producers in Santa Cruz, emphasises the need to remove restrictions on the use of biotechnology, which is not a problem in Argentina, Brazil and Paraguay. “Without biotechnology, it makes it very difficult to compete with our neighbours,” says Díaz. “We want biotechnology to enter through the front door, not the back window.” He claims that some non-governmental organisations have been “brain-washing” people to oppose genetically modified organisms. As a result, many farmers are using biotechnology illegally.

The use of precision agriculture would also raise productivity, says Díaz, especially for smaller farmers. “Yields are much lower for small and medium-sized producers,” says Llano.

However, the relentless expansion of Bolivian agriculture has created some of the highest deforestation rates in the world. This has risen from almost 150,000 hectares a year during the 1990s to as much as 300,000 hectares by 2010. Now, officials are talking of clearing as much as 1m hectares a year, in marked contrast with the leftwing government’s environmentalist rhetoric.

Thomas Killeen, an environmental scientist, argues that Bolivia could increase its agricultural production dramatically “without cutting down a single tree”. “The country could easily double or even triple production with no further deforestation if producers adopted modern water management while expanding crops on to underutilised pastures,” he said.

The barriers to deforestation-free production are largely financial, says Killeen, since technology is capital intensive and farmers prefer to invest their money in land. To clear a hectare of land costs about $800, while installing efficient irrigation systems costs about $2,500 per hectare.

“We have to find a balance between expanding our agricultural frontier and increasing productivity,” says Llano. Although he supports plans to increase the area of land under cultivation, he points out that big productivity gains can be made.

Whatever course the country adopts, there is no time to lose, says Dabdoub. “The macroeconomy is doing well, and there are good prospects for the next couple of years.” But he warns that falling commodity prices and the slowdown in China will eventually take their toll.

“We need to reflect. The bonanza won’t last forever,” he says.

Quinoa: Ancient superfood, modern success

Inca soldiers ate it to strengthen them for battle. Nasa said it was perfect astronaut fare. It has more nutrients per 100 calories than any other grain and people from New York to London pay roughly $10 a pound for it, writes Andres Schipani.

Quinoa is the original superfood, much of it grown on Bolivia’s high plains by Aymara and Quechua farmers. One of them is Guadalupe Ramos. She lives in Jirira, a cluster of adobe houses between Potosí and Oruro where the trademarked “royal” quinoa is grown. “This is the real thing,” she says, cupping a handful of the organic grains. “Others may have more but ours is the best.”

Her barb is aimed at neighbouring Peru, now the world’s biggest exporter. “I am 70 years old and look 50, thanks to eating our quinoa,” she insists.

Bolivian quinoa was the first to gain recognised organic certification and is highly prized, confirms Pablo Laguna, an anthropologist at Mexico’s Michoacán College who researches quinoa. Aid and fair trade organisations, as well as organic food importers from developed countries, opened the gate to niche markets.

The US imports 60 per cent of Bolivia’s quinoa production; the rest goes mostly to Europe. Exports soared from 4,900 tonnes in 2005 to 35,000 tonnes in 2013, according to the ministry of productive development and plural economy. Shipments dropped slightly in 2014, to almost 30,000 tonnes, valued at $197m.

The price paid to Bolivian producers per kilo of organic royal quinoa also rocketed: from under $1 in 2007 to almost $5 last year. Prices have dropped to almost three dollars, so many farmers, like Ramos, are hoarding 46kg bags, hoping for a rebound.

“They may have to wait a while,” says Laguna. “There is too much quinoa being sold around the world right now.”

Financial Times.

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Even so, the ultra-conservative religious group in Bolivia’s eastern lowlands is thriving. Struggling to express himself in Spanish, Peters resorts to a virtually extinct dialect of German that survives in a handful of Mennonite communities in the fertile plains of Santa Cruz province to explain the reason for their success: soya.

“This is the most productive farming area in Bolivia,” says Jacob Fehr, the vice-president of the more liberal neighbouring Mennonite colony of Chihuahua, founded 26 years ago. Over the past decade, his community of about 220 families has more than doubled the amount of land they own and farm to 25,000 hectares, largely thanks to the recent boom in commodity prices.

These farmers are on the front line of an agrarian revolution in Bolivia that in recent decades has attracted Japanese and Russian immigrants as well as large-scale investments from Brazil and Argentina. This has driven explosive growth in the economy and population of Santa Cruz province, whose eponymous capital is one of the fastest-growing cities in the world and now the largest in the country, with around 2m inhabitants — nearly a fifth of the national population.

Santa Cruz is the powerhouse of Bolivian agriculture. It represents about 60 per cent of national farming yield, with soya accounting for more than half of the province’s production. With neighbouring Argentina, Brazil and Paraguay already saturated with soya crops, the potential for expansion in Santa Cruz, where much land is underutilised, has led some to see it as South America’s next agricultural frontier.

Such hopes have only been strengthened by the fall in global oil prices, which has forced energy-producing countries such as Bolivia to seek alternative and more sustainable forms of income. With soya alone representing Bolivia’s third-biggest source of foreign exchange after gas and mining, the government has announced ambitious plans to boost the area of land under cultivation from 2.7m hectares last year to 4.5m hectares by 2020.

“There is enormous potential here,” says Gabriel Dabdoub, a prominent businessman in Santa Cruz, who believes the agricultural sector cannot flourish without support from the government to boost productivity levels, which lag far behind the agricultural giants of Brazil and Argentina. But doubts remain as to how committed the government is to promoting agriculture, and what kind. “It is the million-dollar question,” says Dabdoub.

René Orellana, Bolivia’s planning minister, said in an interview that of $48bn in planned public investments by 2020, the government is aiming to invest more than $5bn in agriculture, and about $2.5bn will be spent on building agro-industrial complexes. He emphasised that the investments would be focused on strengthening small producers in the western highlands and non-traditional exports with high added value, rather than the soya farmers of Santa Cruz.

Still, relations between big landowners and the government have improved a great deal since the tense early years of Evo Morales’ presidency. His need to maintain support among his power base, the poor indigenous population in the highlands, led to serious clashes with the more affluent citizens of Santa Cruz, who have always yearned for greater autonomy from La Paz. “We realised that we were not going to get anywhere fighting, so we said, let’s talk,” says Jaime Suárez, a farmer involved in negotiations with the government. Nevertheless, landowners complain that dialogue has yet to translate into action, with bureaucracy posing a particular problem.

Farmers reel off a long list of challenges. Chief among them is legal security, with bitter complaints about government intervention in the export sector. Most also cite the need to improve technology, problems accessing credit, and the land-locked country’s poor infrastructure.

The relentless expansion of Bolivian agriculture has created some of the highest deforestation rates in the world “If we seriously want to open up our agricultural frontier, it will be necessary to grow our agro-industrial sector as well,” says José Llano, who heads the college of agronomists in Santa Cruz. A study co-ordinated by Llano concluded there are almost 2m hectares of good agricultural land in Santa Cruz that lies uncultivated, representing an extra $3.8bn in potential revenues in addition to the $2.2bn that the province’s agricultural sector currently generates.

Reinaldo Díaz, president of the business chamber for soya producers in Santa Cruz, emphasises the need to remove restrictions on the use of biotechnology, which is not a problem in Argentina, Brazil and Paraguay. “Without biotechnology, it makes it very difficult to compete with our neighbours,” says Díaz. “We want biotechnology to enter through the front door, not the back window.” He claims that some non-governmental organisations have been “brain-washing” people to oppose genetically modified organisms. As a result, many farmers are using biotechnology illegally.

The use of precision agriculture would also raise productivity, says Díaz, especially for smaller farmers. “Yields are much lower for small and medium-sized producers,” says Llano.

However, the relentless expansion of Bolivian agriculture has created some of the highest deforestation rates in the world. This has risen from almost 150,000 hectares a year during the 1990s to as much as 300,000 hectares by 2010. Now, officials are talking of clearing as much as 1m hectares a year, in marked contrast with the leftwing government’s environmentalist rhetoric.

Thomas Killeen, an environmental scientist, argues that Bolivia could increase its agricultural production dramatically “without cutting down a single tree”. “The country could easily double or even triple production with no further deforestation if producers adopted modern water management while expanding crops on to underutilised pastures,” he said.

The barriers to deforestation-free production are largely financial, says Killeen, since technology is capital intensive and farmers prefer to invest their money in land. To clear a hectare of land costs about $800, while installing efficient irrigation systems costs about $2,500 per hectare.

“We have to find a balance between expanding our agricultural frontier and increasing productivity,” says Llano. Although he supports plans to increase the area of land under cultivation, he points out that big productivity gains can be made.

Whatever course the country adopts, there is no time to lose, says Dabdoub. “The macroeconomy is doing well, and there are good prospects for the next couple of years.” But he warns that falling commodity prices and the slowdown in China will eventually take their toll.

“We need to reflect. The bonanza won’t last forever,” he says.

Quinoa: Ancient superfood, modern success

Inca soldiers ate it to strengthen them for battle. Nasa said it was perfect astronaut fare. It has more nutrients per 100 calories than any other grain and people from New York to London pay roughly $10 a pound for it, writes Andres Schipani.

Quinoa is the original superfood, much of it grown on Bolivia’s high plains by Aymara and Quechua farmers. One of them is Guadalupe Ramos. She lives in Jirira, a cluster of adobe houses between Potosí and Oruro where the trademarked “royal” quinoa is grown. “This is the real thing,” she says, cupping a handful of the organic grains. “Others may have more but ours is the best.”

Her barb is aimed at neighbouring Peru, now the world’s biggest exporter. “I am 70 years old and look 50, thanks to eating our quinoa,” she insists.

Bolivian quinoa was the first to gain recognised organic certification and is highly prized, confirms Pablo Laguna, an anthropologist at Mexico’s Michoacán College who researches quinoa. Aid and fair trade organisations, as well as organic food importers from developed countries, opened the gate to niche markets.

The US imports 60 per cent of Bolivia’s quinoa production; the rest goes mostly to Europe. Exports soared from 4,900 tonnes in 2005 to 35,000 tonnes in 2013, according to the ministry of productive development and plural economy. Shipments dropped slightly in 2014, to almost 30,000 tonnes, valued at $197m.

The price paid to Bolivian producers per kilo of organic royal quinoa also rocketed: from under $1 in 2007 to almost $5 last year. Prices have dropped to almost three dollars, so many farmers, like Ramos, are hoarding 46kg bags, hoping for a rebound.

“They may have to wait a while,” says Laguna. “There is too much quinoa being sold around the world right now.”

Financial Times.

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