Friday , October 22 2021

G20: agro has something to say


There is hope for Trump's meeting with his Chinese counterpart in Buenos Aires Source: Reuters

The Group of Twenty (G20) meetings to be held next week in Buenos Aires can mean more than just traffic and security issues. At least for agro.

The context in which the peak of the developed and developing countries will take place cannot be more complicated. The effects of the commercial confrontation between the United States and China, the world's main economy, have triggered unforeseen consequences. In principle, it changed the soybean trade because China responded to US measures by increasing tariffs on imported peanuts from the United States. and affect exports by 14,000 million dollars.

For several weeks at the Chicago market any rumors or news about possible negotiations between Washington and Beijing served as a bullish argument for the quote. So far there has been more speculation than data. Now the focus is on a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping in Buenos Aires. Both are needed, but, at the same time, they don't seem to want to give up.

Disputes between giants are not in the plans of those who believe that the demand for Chinese soybeans will be unlimited. One derivation of a trade war is that China announced its intention to begin replacing soybeans with other grains which enabled it to convert vegetable protein into animals. For now it will be on a small scale, but this is the first time that changes in seemingly irreversible tendencies are glimpsed.

Another consequence is that China will seek more soybeans in South America. In the first place, Brazil was favored who did not suffer from a drought that affected Argentina. For the current cycle, Brazil predicts, at least 120 million tons of harvest, although some have estimated it will reach 137 million tons. Seed exports will reach 80 million tons of which 80% will be for China. But politics has begun to make a scene. Brazil's elected president, Jair Bolsonaro, criticized Chinese investment in his country. Once again the alarm of protectionism is heard to the point where Brazil's Minister of Agriculture, Blairo Maggi, must clarify that the future president does not intend to influence trade.

The pyrotechnic of Bolsonaro's declaration will limit the realism of the country's strategic interests. And agriculture is one of them. He stressed this with the appointment of the village bench coordinator, Tereza Cristina, as the next Minister of Agriculture. For Argentina, the question of the fate of Mercosur is open. The front occupants of Planalto Palace have said that regional blocks are not a priority. Strictly speaking, it means that they will renegotiate the requirements of the customs union and seek state agreements. For quota realism it is unlikely that Brazil will suspend Mercosur's tariff preference for Argentine wheat. Bolsonaro will not come to the G20, but his arrival in Brasilia will also have consequences for international trade.

Another scenario that can bring something new at the G20 is bilateral meetings. In the case of Argentina, the support Trump gave to the Macri government in an agreement with the IMF could be extended to the commercial sector. The highest expectations placed at the awaiting opening of the beef market – there is no reason to keep closing it – and some additional definitions of biodiesel after the announcement by the Commerce Department on a review of measures against Argentine biofuels.

Formally, the G20 will confirm the document signed by the Agriculture Minister last July in Buenos Aires where there is clear recognition of scientific and technological evidence in agricultural production. Argentina was influenced to adopt these criteria in the declaration. This is an antecedent to consider, especially in front of several European Union governments where the old vision remains in agricultural production and food trade.

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