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The TCP and small soy producers of Santa Cruz

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The TCP and small soy producers of Santa Cruz

Ana Isabel Ortiz

12 June 2007

(freely translated from the Spanish)

Last 29 April was the first anniversary of the signing of the People’s Trade Agreement (known as "TCP" in Spanish) through which Bolivia entered the ALBA (Bolivarian Alternative for Latin America and the Caribbean) integration process. ALBA was initially signed in December 2004 between Venezuela and Cuba. Nicaragua is its most recent member.

The People’s Trade Agreement aims, among other things, to support the productive development of peasant farming through initiatives that promote inclusive, sustainable and sovereign agriculture. In this framework, one programme approved through the TCP supports the integrated development of the soybean sector addressing each link in the chain. The main objective is to help farmers of the Santa Cruz area who would otherwise be badly affected by free trade agreements concluded with neighbouring countries that are traditional outlets for Bolivian soy exports.

One of the main pillars of the programme involves a guaranteed increase in Venezuelan purchases of Bolivian soybean. Venezuela is one of the biggest importers of Bolivian soybean, buying up 600 million tonnes per year. Under the TCP, Venezuela has agreed to purchase an additional 200 million tonnes per year at a preferential price that should directly benefit Bolivian farmers. Another important component of the programme is access to a special credit system through which farmers can buy seeds, fuel and pesticides.

A few conditions determine who can benefit from this initiatives. Participating farmers must be small scale producers (owning no more than 50 hectares of arable land), part of a community, growing conventional (not GM) soy and become members of a working group associated with the programme.

After one year of the TCP, a preliminary study done by CIPCA Santa Cruz shows that 108 million tonnes of Bolivian soybean have been sold at the preferential price of US$217 per tonne. The going market price is US$160 per tonne. This means that a net benefit of US$57 million has been generated through the programme as an alternative to the conventional market.

The programme has also made available US$2.5 million worth of credit for farmers, at an annual interest rate of 4%, without bureaucratic hurdles and other conditions that tend to exclude small producers. This financing has supported about 50% of farmers’ production costs and guaranteed their access to inputs. Through the low interest rate, it has also contributed to farmers’ net profits.

A small farmer cultivating 30 hectares of soybean at a yield of two tonnes per hectare spends around US$8,400. If the farmer sells the harvest through the conventional market, an income of US$1,200 can be made. If he or she sells it through the TCP programme, under the preferential purchasing price (US$217 per tonne), the farmer gets U$4,620.

During this first year, 1,745 small farmers from the two biggest soy producing zones of Santa Cruz (the Integrated North and the East) participated in the programme over two cropping seasons (winter and summer). However, administrators of the programme estimate that 3,000 participated.

Despite these benefits, both the number of participating farmers and the volume of soybeans being marketed through the programme are quite below expectations. It is therefore necessary to follow-up more carefully, especially to clarify how many soy producers exist and what conditions are determining their decision or possibility to join this new market.

Among the weaknesses of the programme, one can say that a stronger participation of small producers from the entire soy chain is needed, including storage, processing and marketing. This is especially the case since, until now, the administrators of the programme are directly engaged in storage and export to the Venezuelan market.

Among the medium- and long-term problems, there is a growing dependence on the development of soy monocultures since no actions to support diversification of agriculture or sustainable farming practices have been developed. Additionally, there is no clear timeframe for the programme. This means that the farmers have no certainty about how long this niche market will remain open.

With the results achieved so far under the TCP soy programme, it is important to make adjustments and undertake other actions as President Evo Morales himself recognised on the first anniversary of the programme’s implementation. At the same time, we have to recognise the progress made in favour of the small peasant producers.

 source: Movimiento Boliviano por la Soberanía y la Integración solidaria de los pueblos: Contra el TLC y el ALCA