Monsanto, ADM, Bunge and Cargill blocked from exporting while courts consider charges that they lied to boost soya profits
by Felicity Lawrence
Guardian, June 1, 2011
The Pampas are just as the old geography textbooks described them: vast flat plains stretching to distant horizons, white heads of tall grasses catching the autumn light. A great empty road ploughs a furrow from Buenos Aires through mile upon mile of fertile lands towards the ports on the great South American waterway, the Paraná river.
But missing from much of the Pampas now are the Argentinian beef cattle that used to be synonymous with this region that makes up one of the world’s most expansive grazing lands.
The way-markers today are grain silos, agricultural hangars for harvesting machines, and banner adverts across nearly every field for agrochemicals and genetically modified soya seed.
Occasionally, the green and orange logo of Monsanto’s Roundup glyphosphate herbicide gives way to an election poster for the Perónist president, Cristina Kirchner, or to a rival chemical or seed company’s billboard. But there’s no question who dominates the landscape here.
Less visible at first, and strangely unfamiliar to consumers in the UK, are the big four transnational exporters that dominate the other half of the soya complex, the so-called ABCD group of companies: ADM, Bunge, Cargill and (Louis) Dreyfus.
Between them, these firms account for 75-90% of the global grain trade, according to some estimates. They provide the fertiliser for the soya, and here, as elsewhere, dominate the processing industry that divides the beans into oil for food manufacturing and protein meal for animal feed. When you reach the ports of Rosario and San Lorenzo-San Martín, they are unmissable, however, with their dozens of crushing plants, biodiesel refineries, grain terminals and elevators towering above the river.
This is where about 55m tonnes of soya a year, worth $24bn (£14.7bn), starts a journey through the docks to the importers – China, India and Europe.
And this is now a key battleground in the fight over the global food system. For in South America, those who control the food chain, make money from it, and determine what we eat, are at the heart of a fierce political debate.
The Argentinian authorities took the dramatic step of suspending all four big transnational traders from their export register this year, accusing them of tax evasion. Last month, it expelled Bunge from the register altogether.
In an exclusive interview with the Guardian last month, Ricardo Echegaray, head of the Argentinian revenue service (Afip), detailed the charges against them. The companies have all denied the allegations and said they would defend themselves vigorously.
The industrial soya complex arrived in Argentina from North America with a bang when the government approved the planting of genetically modified crops for the first time in 1996. Since then soya production has gone from 1m hectares (2.4m acres) to 17m ha, and 60% of productive land is now given over to the monocrop.
Many of the beef cattle have been squeezed into US-style feed-lots to be fattened on grain instead of grass, and 2.5m ha of woods have been lost.
But soya has turned Argentina into a global agricultural powerhouse alongside Brazil. These two countries are, with the US, the largest exporters of soya in the world. Without them, there would have been no cheap factory chicken and no global livestock revolution.
Soya planted on top of soya, with no pause to till the soil, has helped pay farm debts since Argentina’s financial collapse in 2001. But according to Echegaray, the transnational traders are exporting not just the soya but much of their vast profits out of Argentina.
Until 2007, he said, Bunge paid about $100m in corporate income tax in Argentina a year. “Then it decided to set up an office in the tax-free zone of Uruguay’s [capital] Montevideo. From that date, it suddenly declared no gains in Argentina. We cross-checked with Uruguay and we found they had not exported anything from Montevideo and had almost no staff there,” he said.
Echegaray, who is closely allied to Kirchner, said he had evidence that all four companies had submitted false declarations of sales and routed profits through tax havens or their headquarters in contravention of Argentinian tax law. In addition, he said, they had declared excessive costs in Argentina to reduce taxable profits there. He also accused them of using phantom companies, on occasion, to buy grain.
“These companies have descended into criminality,” Echegaray said. “The agro-exporters have extracted the most profit from the economy here in recent years, and our policy is that those who gain most should pay most. We have noticed the companies with the biggest sales show the least profits here. But all the work is done here. The soil is Argentinian, the harvest is done with Argentinian machinery by Argentinians, it is transported on Argentinian roads, through Argentinian ports. It uses Argentinian services and resources – so why are all the gains made in Argentina appearing on paper in other countries?”
The neoliberal consensus of the last two-and-a-half decades, in which emerging economics have been encouraged to open up their agricultural markets and export raw materials while the US and EU have maintained their $250bn-a-year farming subsidies, is under powerful challenge in South America.
Leftwing governments, including Kirchner’s in Argentina, are reclaiming food sovereignty and a greater share of the profits. Part of that has involved taking on the big concentrations of corporate power that characterise many parts of the global food system – the “untouchables”, as one Argentinian official described them.
The grain traders reject the government’s tax charges.
Cargill said: “All the allegations made about Cargill are false. Cargill complies with all Argentine tax and customs regulations. We are vigorously defending various tax and customs audits and litigation. A recent example is a criminal case involving a former Cargill Argentina president and former Cargill Uruguay branch manager, who were unfairly indicted in a criminal case filed by Argentine tax authorities. That indictment was overturned in February 2011 by a court of appeal. Last week, the lower court dismissed the charges against both former Cargill employees.”
Afip said it had been granted an appeal against the dismissal this week and other charges remained to be heard.
Bunge was adamant that it had broken no laws or tax rules, saying: “We believe that we have done nothing wrong and that our past tax payments are complete. This is an issue that is not unique to Bunge, or even our industry. We will continue to take the appropriate legal steps to defend ourselves.”
ADM said it conducted “business in accordance with the laws, including those governing tax obligations, in the countries where we operate”. We are co-operating with Afip to successfully resolve this situation.
The trade association that represents the grain exporters in Argentina confirmed that Dreyfus also denied the charges.
Eduardo Barcesat, the constitutional lawyer who is helping the government draft legislation to restrict foreign ownership of land in Argentina, said the tax moves were a political decision. “The US big traders control most of the storage and the price,” he said. “This is a move to put things in order: no more cheating. Argentina is not getting enough of the value of its resources. We are colonised and we have to be free.”