The production of commodities

Image: Oto Vale
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By RAIMUNDO PIRES SILVA*

Agribusiness is not committed to the democratization of land or a healthy food project

Agribusiness, associated with the mass media, spreads a diffuse notion of modernity, of a food producer, of sustainable production and of a foreign exchange generator in the international market, infusing a certain mythical nationalist consensus in society. In turn, agribusiness, in fact, is a denaturalized mode of commodity production, dependent on and associated with global financial capital, as follows.

As commodities  agricultural products in the global context of contemporary commercialization were increasingly influenced by speculative movements, becoming a class of financial asset. Previously, derivatives of commodities were used as an instrument of hedge, counteracting the volatility of the prices of these goods.

Recently, these markets have been incorporated by world speculation, establishing a correlation between the commodities and other financial segments, a rentier process detached from real production.

Banks such as Goldman Sachs, Morgan Stanley and Citibank, as well as other financial players, migrated to this market. For example, BlackRock, one of the largest investment companies in the world, has an Agriculture Fund to invest in assets such as: futures markets for agricultural commodities, rural land and transnational companies supplying commodities and inputs. Its stock portfolio includes Monsanto, Syngenta, Tyson Foods, Deere and Co and ADM, among others.

Transnational supply companies commodities and agricultural inputs (fertilizers and pesticides) compose their activities with speculative-financial forms. A limited number of these companies (oligopoly) control the main chains of commodities and inputs with the corresponding financial infrastructure and the speculative system complementary to derivatives. It intervenes in fluctuations in the global financial market, including triggering and taking advantage of these fluctuations.

From this select transnational group, they operate in the national commodities: Cargill, ADM (Archer Daniels Midland), LDC (Louis Dreyfus Company) and Bunge. More recently, Singapore's Wilmar group and Chinese state-owned Cofcoa. In terms of pesticides, Syngenta, Bayer, BASF and DuPont. In terms of fertilizers, it is dominated by Norsk Hydro and Mosaic.

In the manufacture of natural resource-intensive goods (sugar/alcohol, paper/cellulose, juice and meat agroindustries, among others) there has been a transformation in the management profile, both with the presence of foreign capital in control of the value chain, and the internationalization of national assets. This process took place mainly through mergers and acquisitions led by banks and other financial institutions. An example is the sugarcane agroindustry with the entry of foreign capital as physical assets; and another example is the meat processing sector, where JBS has risen to be the world's leading beef supplier.

The land market and the world rentier merged in the national territory, with the investment of financial capital in the search for land valuation/speculation, which became apparent after 2008, as a result of the economic crisis. The purchase of land combined with speculation in the financial markets determined the expansion of agricultural land trading companies (buying, selling and leasing), with global investment funds as the main source of financial resources – land being a global financial asset.

For example, SLC Agrícola (largest grain and fiber producers in the world) manages SLC Land in j with the English fund Valiance, controlling almost half a million hectares of land.

The company Radar Imobiliária Agrícola S/A, controlled by the companies COSAN limited and Mansilla Participações, (majority shareholder, of which the pension fund TIAA – Teachers Insurance and Annuity Association of America – is wholly owned), manages around 300 thousand hectares.

Financial capital outsources land deals, exempting itself from responsibility for impacts caused by speculation in the Brazilian countryside, since they are not direct owners of the land – a hidden characteristic in the appropriation regarding the actual origin of the capital.

Finally, global financial capital seeks to bring the rentier logic to the land, transforming land ownership into an opportunity for a financial asset, regardless of actual primary production. For this reason, the current government issued Provisional Measure (MP) 892/2019, transformed into Ordinary Law 13986/2020. This ordinary law instituted the allocation of property, that is, the dismemberment of the property for the purpose of credit guarantees, it being no longer necessary to compromise the total property, and constituted the CIR (Rural Real Estate Certificate), which may be traded in the market of bonds and securities.

That said, it shows a subjection of territorial and agricultural sovereignty to the imperative interests of agribusiness. A mode of production that ceased to be national, adapting to processes that redefined its functionality to global capital.

*Raimundo Pires Silva is an agronomist engineer, PhD in Territorial and Environmental Development from UNIARA.

Originally published in the newspaper Brazil of Fact.

 

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