The Soybean Trap: Challenges and Risks for Brazilian Producers

Abstract

Since the 1970s, Brazilian soybean production has grown rapidly, driven by increasing national and international demand and rising prices. Consequently, soybean production has come to be perceived as an attractive opportunity, with the number of farms producing soybean across the country reaching around 240,000 in 2017. However, producers can become trapped by dependencies on moneylenders, traders and input supply companies, facing so-called' agricultural treadmills'. In this study we undertook interviews with individual soybean producers and representatives of trader companies, producers' associations, the processing industry, government and civil society, and used these data to analyze rural production operations related to the soybean supply chain and to interpret how agricultural treadmills persist in this sector. Based on literature review and fieldwork interviews, we found that producers have been able to add value to their products, but some strategies they use to cope with production costs lead them into high-risk situations. Our findings show that, sectoral (e.g., producers' associations) and collective actions (e.g., farmers' buying groups) are a useful strategy for producers to gain influence and bargaining power against transnational companies and input suppliers compared to acting as an individual within the soybean supply chain. Producers were emphatic that the current soybean business is now much more than just farming activities, and that education and training are highly valuable and important strategies to keep producers in the soybean business and out of traps. These findings are important given the neoliberal context in which individual producers find themselves and which presents challenges that alone they can do little to change. Policies that enable individual producers to make environmentally-and financially-sound agricultural decisions are vital to ensure a sustainable soybean system that does not trap producers in endless cycles of debt and investment.

Three Decades of Changes in Brazilian Municipalities and Their Food Production Systems

“…Previous literature has called attention to the need of achieving synergies, and minimizing trade-offs, between SDGs related to food systems [3]. Farm size and production, along with numerous other agricultural-socioeconomic measures, are key indicators for understanding the sustainability of food systems [4,5]. However, greater understanding is needed about when, where, and in which situations large or small farms can achieve better production outcomes, and improved synergies considering production, environment, and economy [1,[6][7][8][9][10].…”

“…Recently, Rada and Fuglie [4] suggested that farm size and productivity evolve with the stages of economic development in a region and that there is no single economically optimal agrarian structure. However, the logic of economies of scale has driven increased production to favor larger farms in many places [5] and leading regions to specialize in specific commodity products to gain competitive advantages. This increased production and specialization has been traded-off against other agricultural socioeconomic benefits (e.g., lowering rural labor demand and crop diversity) and environmental degradation [11][12][13][14][15][16].…”

“…Here lies an important economic trade-off, e.g., soybean yield vs. the production scale of the farm. Driven by economies of scale, sometimes large soybean farmers end up producing crops in large areas but with low yields, which in-turn squeezes profitability while operating at large scales [5]. These examples demonstrate how different perspectives on the values of multiple variables can produce trade-offs.…”

“…Brazilian food systems have been shaped by domestic and international forces during the last three decades, a period of monetary stabilization, public cuts in agricultural incentives, and entrance of private firms leveraging farmers' choices towards a more capital-intensive agribusiness system [16,[38][39][40]. Partially explained by the national colonization history, partially by geographical location, infrastructure, and environmental conditions, Brazil has developed different agricultural production regions, varying from small-to-medium farm sizes to large ones, the last often associated to Midwestern and Northern regions of the country [5,16,18,38,41]. Since the 1940s, the Brazilian Federal Government started colonization projects that aimed to integrate the Midwest and Northern regions with the rest of the country by connecting them to the national economy as a provider of agricultural products and support for the industrialization of the southeast [42,43].…”

“…Supported by the premise that sustainable food systems must be holistically evaluated by taking into consideration the trade-offs and synergies between socioeconomics and environmental impacts [22,23], we place our lens at the municipality level, looking for associations of trade-offs and synergies in the food systems with the varying soybean farm sizes across Brazil. The farm unit is where farmers' decisions can be explicitly evaluated [5] but is at the local scales (e.g., municipality) that effects of farming landscapes are better understood as they are dependent upon political, economic, or biophysical contexts [35]. Additionally, previous studies have demonstrated that broader levels can be more effective for planning sustainable development than traditional farm-level planning in Brazilian contexts [47], especially for municipalities with high dependency on monocropping systems [48].…”