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Dow, DuPont, Monsanto and Syngenta Take Over Brazil’s Corn

Dow in Brazil Recent news from media sources would have readers believe that Brazil is euphoric in its corn production. It is true that we are seeing some impressive figures, and never have we exported so much corn. Predictions show that corn production will only increase in 2008.

And according to analyses being done by agribusiness, the expectation is that Brazil will become the biggest exporter of corn in the world.

On the other hand, the scene has never been so sober for family farms and food security. For some time now, big multinational corporations have been investing in and gaining control over the food chain on a global scale. In this strategy, the seed industry holds a key role.

Big corporations have adopted an aggressive policy of acquiring seed companies on all continents, setting up an growing oligarchy in this sector. One example is that of Monsanto, which according to a 2005 report of the ETC Group, controls 41% of the global commerce of corn seed.

In Brazil, it is the same reality. Since the 1990s, multinationals have increased their control of the seed market. Soon after the approval of the Law of Protection for Cultivation in 1997, the multinationals have acquired 22 companies.

And the corn industry in particular has been a preferred target in this offensive, demonstrating very clearly that there exists a situation of oligarchy in this area.

In the last few months, two big multinationals have deepened their involvement in this situation. In August, Dow Agroscience bought out Agromen, which held 10% of the Brazilian corn seed market. In September, Monsanto then announced its acquisition of the corn division of Agroeste. It is estimated that both Dow and Monsanto dolled out US$ 100 million each in these purchases.

With the acquisition of Agromen, Dow now has more than 20% of the corn seed market, while Monsanto increased its participation in the same market to 30%, nearing DuPont/Pioneer, the front-runner with 33%. These three companies along with the Swiss company Syngenta almost totally control the Brazilian seed market.

But they are not ready to stop. Now it seems there is great interest in another Brazilian company, Santa Helena, in the state of Minas Gerais. Christian Pflug, manager of biotechnology and licensing of Monsanto corn left the company's intentions clear in a recent interview in the magazine, Valor Econômico:

"We are going to take every opportunity that comes our way to consolidate our position in the corn seed market, just as we have done in the United States."

One of the reasons for this frantic rush to corn is that it is currently a hot commodity in the international market. The United States announcement of its corn-based ethanol production plan has had a devastating effect on corn sales and its surge in price.

Certainly, other products will rise in price as US farmers abandon other crops in favor of corn for ethanol production. With the high demand for corn, principally in Europe, there has been a huge escalation in price, from US$ 116.60 per ton in July of 2006, to nearly US$ 165 in 2007.

Although Brazil may be a big producer of corn, the crop has never occupied a distinctive place in exports. Until this year, the record for corn export happened in 2001 when 6 million tons were exported. In 2006, 4 million tons were exported. But the high demand has caused a real boom in Brazilian export.

It is estimated that by the end of this year, 8 million tons will be exported, double that of 2006. The favorable performance of corn on the market has generated high expectations. Even the Ministry of Agriculture is now saying that exports will soon reach 10 million tons.

And these expectations are not just limited to short term gains, but will extend themselves over the next 2-3 years when the US plans to substantially increase its ethanol production.

Brasil de Fato

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  • Show Comments (8)

  • João da Silva

    [quote]How’s the coffee business?
    [/quote]

    I heard the rumor that Ch.c has outsourced it to MST 😉

  • JAY GLENN

    Actually we were a small family farm three generations ago (422 hectares).
    We used all the resources available to us. Good high quality seeds, good credit, good business partners (JOHN DEER, ADM, BANK OF AMERICA). I see how that could be imposable in Brazil, you insist on using domestic partners that donˢ۪t exist. By the way were are a GREEN Farm (JOHN DEER, NO INSECTICIDES OR FERTILIZER), we have no need to depend on foreign equipment or help.
    It took a lot of domestic help. Should I have waited for foreign help, the opposite of what you suggest? Waiting for others will keep you in the third world. Especially if you are waiting for Brazilian government partners and private investors. If you live in the arm pit of development you must look out side for help or sit and starve. How noble. Those who can, DO those who canˢ۪t, complain. Itˢ۪s always someone else at fault.

  • aes

    Ch.c: It looks like gold is heading to $830 now as oil approaches $100. When gold historically had reached $830 interest rates were 20%. Gold was an inflationary hedge. The current price of gold is above $800. The price of gold is an opinion. The world is betting the the U.S. economy must logically fall into an inflationary recession, especially as oil approaches $100. The price of gold is unwarrented. It has limited real value and the cost of mining it is around $225 per ounce (31.125 grams). A price of a commodity is based on perceived demand. The real utility of gold is limited, as a conductor or bijouxery and as an historical measure of value. But all commodities go up and down. The current price is based on the preasure of central banks diversifying reserves. But gold goes up and down and when it begins to head south, central reserves will begin selling as occured 6 years ago when gold was $290. There was a rush by central banks to sell gold. Gold’s current price has nearly tripple in all currencies, not just the dollar.

    What will blow all of this to hell is the apparent military plans for Iran. This will have monumental psycological consequences and when the economic dust settles what will be the dollar state of affairs? China’s economy will suffer monumental correction as it is unable to sustain its export ‘golden goose’. China can only sustain itself on a domestic economy and it has not reached the capacity of a self sustaing domestic market. It will in time, but it is an export economy and a global recession is not in its interest.

    You say that you must look at a 70 year history of a commodity or currency in order to understand the real state of affairs, the real value of a thing. This is not true. There are fundamental changes in technological development, ie robotics in manufacturing or inccreased technologies in agriculture allowing greater production or global shipping represented by Fed Ex or UPS or communication or the historical appearance of China on the world market with its 3 billion new customers or India or the Mid East market.

    The world is economy today is naiscent, it is newly emerged in the past 20 years. All things prognosticating economic trends must begin there. Brazil has economically changed. It is a global player. It is one of the largest producers of cattle, poulty, iron ore, ethanol, on the planet. It essentialy is a central supplier of food, fuel and construction material to the developing world. The developing world will develop and so will the markets that Brazil does business in. The Real is based on these fundamentals not the fundamentals of 60 years ago. The price of Bovespa is a manifestation of the perceived soundness of global investors. They have well considered the ramification of all things before coming to the conclusion that Brazil is economically important in this millenia. The people like Buffet who are investing in this new economic reality of Brazil are infinitely more savy than you or I and have access to graphs, computer models and information that is far greater than yours or mine. The question is how you determine the reality in media res. Brazil’s economic solvency is extant from the U.S., its markets far exceed the limitations of North America. The market place of Brazil is the world.

  • ch.c.

    TO WHAT IS THE PROBLEM and to AES !!!!!!!!!
    1) TO WHAT IS THE PROBLEM.
    – I dont have any. Re-read my question : if EMBRAPA is so great as the brazilian pretend in newer seeds , what is their market share in corn seed….since the 4 foreign firms already controls well over 90 %….not including the small private companies ?
    – As I said only the large and mega farms generate profits not the small and medium farms who are struggling.
    – As I said too, most Brazilians caress their navel on agriculture production, such as you do, forgetting that you are using FOREIGN TECHNOLOGIES and not Brazilian technologies……as Brazilians pretend they are so advanced !
    – if the insect loss will drop, crop yield will increase, it will be 100 % based on foreign products, not Brazilians products. And you just prove it.I even bet you have forreign tractors and foreign harvesters

    To AES :
    – the world price of grains is not priced in Reals but in US$
    – if The exchange rate was let say 3,60 to 1 $ and now 1,80 to 1 $ and assuming the grains price doubled from 1 to 2 $ you still get 3,60, !!! Where is the additional profit ??????
    – The BRL increased BUT after it fell nearly 70 % ! Thus 1 BRL became first US$ 0,28 and is now at Us$ 0,57 ! STILL BELOW THE 1998 price of 1 BRL to 1 US$…to my knowledge. Where is the currency appreciation. You see AES you CANNOT chose a starting point from a low….and make a long term assessment of a trend. Otherwise I could as well say look at this fabulous company (whatever name) that went from 1 to 4 US$, omitting….on purpose….that first it went from 100 to 1 !
    – And curiouslÀƒ©y the longer term you look at the BRL, the worse the BRL was. Even a billion time weaker than the already weak US$ !!!
    – In reality, the BRL has a long term DOWNTREND….with INTERMEDIATE trends recoveries ! That still doesnt make a strong currency over the decades. Sorry for you !!!
    – And saying this time is different, just refer to the exact same promises made over the last 70 years or so, or refer and re-read your medias of those times, every time your currency went to an intermediate recovery, just to collapse to the floor thereafter. I am not saying it will collapse in the next 12 months, but it will within the next 5 years. Smile !!!!!
    – As to the price of the seeds going down, just ask Jay, if they did !!!!!!! laugh…laugh…laugh…
    – It is like if you said “if input prices are higher, oil price should go down” Well it did not,
    – Ohhhh AES, where do you stand at your “apparent and virtual” gold sale at 830.- US$, a price still not reached in the last 25 years ?
    You used the same maths as those on your regular comments ! Or the same….ignorance and mix up ?
    – And sorry for you again, but thus far our wheat price paid to our farmers has not changed by 1 cent in several years. They are requesting a 5 or 10 % price incease for next year, depending on their negotiations !!!!!!! True really.Is that not what is called price stability ????? At least they can make a forward income budget…contrary to 99,99 % of the world grains farmers !!!!!!

  • JAY GLENN

    SO WHAT IS THE PROBLEM?
    SEED CORN WILL IMPROVE IN BRAZIL , CROP YELD WILL INCREASE.
    INSECT LOSS WILL DROP. YOU SEEN SURPRISED THAT GOVERMENTS LIE. EVERY THING THEY SAY IS GEARED ON REELECTION, TELL THE PUBLIC WHAT THEY WANT TO HEAR. IT WORKS THAT WAY ALL OVER THE WORLD. WHAT THEY KNOW ABOUT THEY TWIST TO THERE NEEDS, WHAT THEY DONÀ¢€™T KNOW ABOUT THEY STILL TALK UP.
    OUR FAMILY FARM IN THE STATES IS 75,000 HECTARS WE GROW ARCHER DANIELS MIDLAND CORN AND SOY. A BIG COMPANY WITH GREAT PRODUCT. JUST KEEP BITCHING AND WISHING FOR A PERFICT WORLD.

  • aes

    Always glad to accomodate you Ch.c.

    It happens that for soyabeans, for example, in early 2004 when prices were similar than today in US$, the per sac price of soyabeans paid to your farmers was over 60 Reals. Today…..around 35 Reals….because the US$ fell sharply.

    The world price for corn is higher in any currency. Sell to Euro based countries. The Real has increased in value against all major currencies. If the profit to the U.S. is unprofitable then sell to other markets.

    It is always the brokers or processors that make the greatest profit off of agriculture.

    The responsibility of profitability is the farmer’s. If one product is unprofitable then change the crop.

    The other thing is if the world price of corn is rising/has risen then the domestic value of the corn will be higher. It would behoove the Brazilian farmer to sell domestically if the consequence of selling abroad produces negative income.

    As to input costs increasing, they being in business must adjust the price of their seed. The responsibility of the producer of seed is to provide profit for the end user of the seed.

    Fuel costs have increased, but that is offset by lower interest rates for capital purchases.

    How’s the coffee business?

  • ch.c.

    continued……
    …the preceeding comments just confirm that manipulating your exports INCREASED VALUE of grains and stipuiating the stats in US$…which nerarly halved against your currency since 2003…….IS OF NO VALUE…..AS I HAVE STATED SO MANY TIMES IN THIS FORUM.
    Again, just ask directly to your own farmers.

    Because I also said, to make appear your exports growth even more impressive, you may as well translate into the Venezuelian currency….which fell by around 60 % against the weak US$….since 2003 !!!!!!

    Ohhh…and if you look at sugar, coffee, orange juice that you are so proud of, it also happens that your farmers have the same problems than for grains : THEY DONT RECEIVE HIGHER PRICES TODAY THAN THE PRICES RECEIVED IN 2003 !!!!!!
    Prices also about doubled in US$ from a HISTORICAL LOW PRICEl….but the US$ fell by about 50 % !
    End results ? no price improvement for your farmers since the historical low prices !!!!

    Brazilians have been taken for ride and they applaude. You have been brainwashed by who you know, and you re-elect the same liar ! You have been told how great you are in agricultural production growth AND more exports income…but no one have realized HOW WRONG THIS IS !!!!

    😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉

  • ch.c.

    Hmmmmmm, strange !
    Time and again and again time and again, Brazil sang like a chicken as to how great EMBRAPA is !
    Correct….or not ?

    In the above the 3 U.S. companies control over 83 % of the Brazilian corn market.
    Plus whatever share Syngenta has.
    As written, foreign companies nearly control ALL of the corn seeds in Brazil.
    Correct or not ?

    Stupid question to the smart Brazilian junkies in this site : WHAT IS THE MARKET SHARE OF EMBRAPA ????????
    Large…or almost NIL ?????

    Just another proof and simple demonstration of how Brazilians are cheating, lying and hiding….as usual !

    And as I have written in this forum so many times, if one is bullish in Brazilian agriculture, just buy shares of the foreign input suppliers, such as those producing seeds, tractors, harvesters, fertilizers, fongicides and pesticides.
    They truly shine because they are also selling worldwide, not only in Brazil.
    And your farmers will continue to make little money….AT BEST !
    It happens that for soyabeans, for example, in early 2004 when prices were similar than today in US$, the per sac price of soyabeans paid to your farmers was over 60 Reals. Today…..around 35 Reals….because the US$ fell sharply.
    On the other hand the input prices have increased sharply……EVEN IN BRAZILIAN REALS !
    End results : simple, your farmers (except the large and mega farms) are making far smaller profits if any !!!!!
    But they would be starving if they did not/do not purchase the newer seeds and related products, producing far more per hectare than older generations seeds and products !

    That is a far away difference from what is told by Bin Lula and his 4000 thieves gang members !

    Feel free to ask by yourself directly to a Brazilian farmer.

    Ohhh and in the input price increase I have not included yet the increase in diesel prices even in Brazilian currency !!!!!

    Allo….allo….allo…anyone there ? I cant hear you ! Where is AES the idiot ??????

    Laugh….laugh….laugh…laugh

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