Friday, March 03, 2006

Lost soya market?

According to the newspapers (here, here, and here), Bolivia's soya bean producers are blaming the government's inaction on the loss of the Colombian market.

What I could gather from the articles is that Colombia is subscribing to a free trade treaty with the US. The treaty allows US soya bean producers to sell up to 900 thousand tons of soya beans and soya cake to Colombia. What this means is that Bolivian soya will have to compete with efficient and subsidized American soya bean producers. Although I don't know the numbers, the panic from Bolivian producers hint that American soya is more price competitive. The economical consequences are significant, since Colombia is the second biggest market for Bolivian soya.

I do not see how the government could have pressured Colombia into not accepting American soya. Maybe using the argument that subsidized agro-industry products are unfair for competition? Seeking support from other Andean countries? I don't know how these international negotiations work.

In a response to the producers' attacks, the government floated the idea of opening China's market. Critics however consider this option economically unsound.

Finally, I am unhappy at how the newspapers sell this piece of news. They alarmingly announce the loss of a market as though Colombia is saying we are buying no more Bolivian soya. The newspapers should instead put the spotlight on the additional competition and the subsidies. The intention of the headlines is to accuse the government of ineffectiveness (arguably they are indeed guilty of that) although the real problems seem to be bigger than that.



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