The specific Argentine context promotes the high adoption rate of herbicide tolerant transgenic soybean in a sophisticated, input-intensive technology package. Although short-term advantages for the farmers seem to be convincing, the success of the technology could turn sour if export markets do not accept these crops. While the long-term economic and ecological impacts might create more losers than winners, alternatives are not easily at hand.

Argentina presently produces 10 per cent of the world’s soybeans (Glycine max or G. soja). While responsible for only one third for soybean grain exports, it is the world’s largest exporter of crushed soybean and oil with world market shares of 31 and 36 per cent, respectively. Soybean and its derivatives alone account for one fifth of the country’s export earnings of US$ 25 billion. To understand the present role of transgenic soybean for Argentina’s economy it is worth to look at the recent history of the country’s agricultural production.

The Pampa Ondulada, Argentina’s area of highest agricultural productivity, is also worldwide one of the naturally most productive areas. Its fertile loess soil and benign climate the whole year round provide a natural competitive advantage over other regions, and consequently, national policy has abstained from subsidizing agriculture. Traditionally, cultivation of grains was altered with fallow seasons to grow cattle pasture. At the beginning of the 1980s, world market prices for grains and oilseeds increased, while at the same time productivity of raising cattle declined. Permanent crop cultivation became more lucrative, since the production of soybean in rotation with wheat, maize or sunflower allows for 3 harvests in 2 year. Furthermore, in 1991 the end of hyperinflation due to the fixation of the Argentine peso against the US dollar and abolition of export levies on agricultural products triggered an investment in new technologies. This new framework favoured the import of machinery and agricultural inputs such as pesticides and fertilizers at low prices and their use in oilseed production for export markets.

The intensification of the production system was followed by a decline in soil fertility. Consequently, fertilizer consumption stepped up from 0.3 million tonnes in 1990 to 2.5 million tonnes in 1999.

Furthermore, to combat increased erosion, a new sowing technology called no-tillage was introduced. At present it accounts for 60 per cent of soybean planted in rotation with maize and 85 per cent of this oilseed in rotation with wheat. In contrast to the conventional method of ploughing the field before planting to eliminate weeds, no-tillage means that seeds are sown directly into the soil with a drilling device and that weeds are controlled by herbicides. Thus, the spread of no-tillage lead to an increase in herbicide use.

In this cascade of technological measures herbicide-tolerant soybean was only the next consequence to increase productivity, which by now have to be seen as a mutually reinforcing package. It is within this framework, that the amazingly rapid adoption of soybean tolerant to Monsanto’s (USA) glyphosate herbicide Roundup took place in Argentina. After first being commercially grown on 800,000 hectares in 1996, transgenic Roundup Ready (RR) soybeans cover an estimated 7 million hectares in the 1999/2000 season, above 80 per cent of the total soybean acreage of 8.3 million hectares. During the same period, no-tillage sowing grew by more than a factor two and glyphosate use tripled.

Rapid adoption of transgenic soybean

• Lower herbicide prices. In Argentina, glyphosate is not protected by a patent. Monsanto now faces competition by several companies that commercialize the product like AstraZeneca (Sweden/UK), and Dow Chemical (USA), but also Argentine producers such as Atanor. As a result, glyphosate prices have plummeted to a quarter over the last years, which makes it economically more attractive than any other substance for weed control.
• Fewer expenses on labour, fuel and machinery. Direct sowing and more effective herbicide application allow for crop cultivation with less labour and fewer machinery cycles.

Also the specific Argentine situation concerning intellectual property rights (IPR), the Argentine plant variety protection (PVP) legislation, contributed to the quick adoption of the transgenic technology. Argentina is a member of the International Union for the Protection of New Varieties of Plants (UPOV) under the 1978 version. It allows farmers to save and re-use their own seeds while trading farm-multiplied material is prohibited. However, in reality the distinction between the legal re-use of harvested material and illegal seed multiplication and trading practices is difficult to determine. Argentine industry and government officials estimate that only 50 per cent of the total soybean planted originates from commercial seed sales. Due to this competition, the prices for commercial transgenic soybean seeds have plunged from US$ 907 per tonne in 1997 to US$ 397 in 1999. While the first transgenic soybeans were sold with a technology premium of more than 100 per cent, they are now sold for basically the same price as non-transgenic varieties.

Comparatively weak IPR protection furthermore favoured the dissemination of the RR technology through the development of adequate germplasm. All transgenic soybean varieties currently commercialized in Argentina contain RR technology based on a gene construct developed by Monsanto. However, the company has failed in protecting it by a patent in Argentina. Instead, due to long-standing research agreements with Monsanto, it was the Argentine seed company Nidera that first succeeded to cross the gene construct into its own germplasm and, hence, release transgenic varieties tailored to the local agroecological circumstances. Nidera presently accounts for 67 per cent of the annual Argentine soybean seed market, followed by transnational companies such as Monsanto, DeKalb (USA), Pioneer Hi-Bred (USA) and few national companies like Relmo, Don Mario and La Tijereta.

Although all companies still agreed voluntarily to pay a licensing fee to Monsanto, they can use the germplasm that already contains the gene construct for their own breeding uninhibited by any IPR. This has stimulated the development of Roundup tolerant varieties for regions that are less favourable for soybean cultivation and hence contributed to its distribution beyond the borders of the Pampa Ondulada.

What are the ecological consequences?

Argentina's Secretaría de Agricultura, Ganadería, Pesca y Alimentación (Secretary of Agriculture, Livestock, Fisheries and Food, SAGPyA) gave market approval to RR soybeans in March 1996. Environmental risk assessments commissioned by the Comisión Nacional Asesora de Biotecnología Agropecuaria (National Advisory Committee on Agricultural Biotechnology, CONABIA) so far have not found major differences in the impact of RR crops in comparison with conventional soybean for the following characteristics.

• Competitiveness. In general, soybean plants only survive in conditions of cultivation because they are otherwise too weak to compete with weeds. Glyphosate tolerance does not contribute any competitive advantage to soybean outside agricultural production fields where glyphosate is not applied.
• Outcrossing and weediness. There are no wild relatives of soybean in Argentina to which the transgenic trait can outcross. Natural cross-pollination with non-transgenic soybean due to insect pollinators is likely to generate a gene flow of herbicide tolerance towards unmodified crops. However, this would be problematic for producers who wish to segregate their crops but less so from an ecological point of view.
• Harm to other organisms. As of yet, laboratory and field tests have not revealed any damage of transgenic soybean on other organisms that are beneficial to agriculture, such as Rhizobium bacteria, insects, birds and fish.

Nevertheless, the rapid adoption of glyphosate-tolerant soybean already has an impact on agro-ecology. While glyphosate is known as a relatively benign herbicide that could replace more harmful substances, the overall assessment of its environment effects has to take into account the tremendous increase of glyphosate application. In Argentina, glyphosate use stepped up from 1,000 to 58,000 cubic metres between 1991 and 1999. The substitution of an array of substances to control weeds by only one single chemically active agent inevitably increases selection pressure towards the development of glyphosate-tolerant weeds. The appearance of glyphosate resistance has been reported for weeds such as ryegrass (Lolium rigidum) under similar agricultural conditions in Australia. While this problem has been acknowledged by the CONABIA, measures to detect and isolate such weeds are yet to be implemented.

Seed and agrochemical companies claim that development of new technology packages will be ahead of development of herbicide resistant weeds. Yet new technologies come with a premium and for many Argentine farmers it would be difficult to abandon glyphosate, not only because they are familiar with its application, but also because of its low cost.

Soybean exports vulnerable to public acceptance of GMOs

At a global level, the adoption of the Cartagena Protocol on Biosafety in January 2000 should now provide a regulatory framework for international trade in GMOs, but it remains to be seen how the protocol will work in practice. Most important for Argentina, commodities "intended for direct use as food or feed, or for processing" are not subject to the full Advance Informed Agreement (AIA) procedure (see also the article by Meyer). Argentina and other grain-exporting countries, the Miami Group, heavily lobbied for this exemption since they conceived the AIA procedure as a non-tariff trade barrier. However, importing countries still could ban commodities based on the precautionary principle, implying that the lack of scientific certainty should not prevent a country from taking a negative import decision if it deems necessary.

More important might be the increasing tendency towards labeling of GMOs in many industrialized countries. For instance, in January 2000, Australia and New Zealand governments announced that they would require labeling on GM food and food containing GM ingredients. In Japan, new labeling requirements to be introduced by April 2001 have already compelled food processors to reject GM ingredients, primarily maize and soybeans, rather than pay for labeling and risk consumer disfavour. Yet these markets presently are of little volume and importance for Argentina.

Negative public perception of GMOs is most pronounced in the European Union (EU), which, together with the trade volume at stake, could give the EU a key position in Argentina’s soybean export balance. Europe is dependent on imports of protein-rich soybean meal to feed its livestock. In 1999, 40 per cent of Argentina’s grain exports and 64 per cent of its crushed soybeans were exported to the EU. In Europe, food products containing RR soybean have to be labelled according to the European Council Regulation (EC) No 1139/98 which entered into force in September 1998. Furthermore, the labeling of GM additives and flavourings has become compulsory since April 2000 according to European Commission Regulation No 50/2000.

Grain retailers in Argentina maintain that their export business with Europe has not yet suffered. However, this might change if major European companies such as Tesco (UK) or retailers such as Carrefour (France) put their announcement into practice to ban GM ingredients from their assortments. Earlier in 2000, Carrefour announced to buy 100,000 tonnes of non-transgenic soybean flour from Brazil. Given their financial strength and susceptibility to consumer concerns, these companies have major influence on prices and volume of non-modified foodstuff and might be decisive for the future of GMOs, not only in Argentina.

How do the main competitors in the international soybean export markets react to these uncertainties? Neighbouring Brazil, for example, has not allowed the commercial release of transgenic crops. In December 1999, GM soybean illegally planted in the southern state Rio Grande do Sul had been destroyed by federal authorities. While such activities might not prevent the unlawful trade of transgenic soybean from Argentina, it is at least a strong signal to markets that Brazil wants to continue as exporter of GM-free commodities.

Within the USA, a two-prone market is in the making, since the 1999 announcement of the grain processor Archer Daniels Midland Company (ADM) to pay farmers a premium for non-transgenic crops. However, it remains to be seen if the segregation between GMOs and non-GMOs in the USA will be an economically viable option for farmers also in the coming seasons. Despite this, in Argentina, farmers now almost entirely depend on transgenic soybean, and neither they nor the facilities of the grain retailers are prepared to fulfil requirements for segregation.

Social and economic consequences of the technology package

• Dependence on imports. Grains and soybean have become the main goods for foreign markets, boosting the dependence on import of the inputs for this export-oriented mode of agricultural production. Increasing amounts of fertilizers and herbicides are imported, and the removal of protection against imports led to the bankruptcy of national agricultural machinery producers. While Nidera is the most important seed company for soybean, the commercial seed sector in general has become increasingly pervaded by transnational companies’ subsidiaries. Even more crucial for the future may be the dependence on advanced biotechnologies, predominantly in the hands of a few multinationals, as reflected by the case of glyphosate resistance.
• Declining profit margins. Most vital for the individual farmer, profit margins have been under pressure. Commodity prices for soybean have suffered a decline of 28 per cent between 1993 and 1999, whereas during the same period the prices for gasoline, one of the principal ingredients for production have risen by 26 per cent. Profit margins have fallen by half between 1992 and 1999, which makes it difficult for many farmers indebted with bank loans of high interest rates to pay back for the investments in machinery, chemical inputs and seeds.
• Concentration of holdings. Many farmers have not been able to sustain this development. Between 1992 and 1997, the number of producers in the Pampa Húmeda declined from 170,000 to 116,000 or 32 per cent, while the average size of a producer’s holding increased from 243 to 357 hectares. Historically, agriculturists would produce on their own land. However, in the region Pergamino, the heart of the soybean production area, 50 per cent of the acreage is already managed by third parties.

The present export-oriented commodity production system is most likely to drive more smaller farmers out of business that are not able to sustain the competition. For them, a diversification beyond global commodity markets, be they non-transgenic for export or other crops for internal purposes might render an alternative development trajectory. However, this would require a drastic turn in Argentine agriculture policy, namely to play a more active role and to subsidize small-scale farmers.

The overwhelming domination of transgenic soybean makes farmers especially vulnerable to changes in the global commodity markets due to preoccupation regarding the safety of GMOs. Irrespective if such concerns are justified or not, at the end of the day it is the purchaser of the commodities who decides. In the long run it seems therefore inevitable to analyse the effects of such crops on human health and the environment as well as on the national agricultural production system in a more holistic way to overcome the risks of monoproduction.

Volker Lehmann* & Walter A. Pengue**

*Editor Biotechnology and Development Monitor

** Centro de Estudios Avanzados, Universidad de Buenos Aires, J.E. Uriburu 950, 1° piso, 1114 Buenos Aires, Argentina.
Phone (+54) 11 4508 36 18; Fax (+54) 11 4508 36 28; E-mail wpengue@sinectis.com.ar

Sources
Devoto, R. (2000), "Transgenicos ¿Una Alternativa a Futuro?" Factor Económico, No. 22, January/February, pp. 86-94.

Muñoz, R. (1999), "Mercado argentino de soja transgenica: presente y futuro." PAM-INTA Pergamino, 23, No. 207, pp. 25-42.

Partley, J. et al. (1999), "Resistance to glyphosate in Lolium rigigdum. I. Bioevaluation." Weed Science, No. 47, pp. 405-411.

Pengue, W. (2000), "Sustentables, hasta cuando?" Le Monde diplomatique, Edición Cono Sur. Año 1, número 11, May.

Personal communications with E. Trigo (CEO), E. Cap, M. Gutierrez, E.Hopp (INTA), P. Godoy, C. Vicién (SAGPyA), E. Ezcurra (Greenpeace Argentina), W. Ratcliffe, W. Khorozian (ARPOV), R. Rossi (Nidera), R. Tomas (Acopiadores de Cereales), A. Boy, J. Rully (REDAST).