Argentina fights to save huge soy exports after Dutch rejections

Argentina is scrambling to keep its soy cargoes flowing to Europe after an unapproved genetically modified strain was detected in shipments, raising the risk of widespread rejections of the country’s most valuable export.

Farmers and crushers are going to extra lengths to isolate the drought-resistant soy strain known as HB4 from the rest of the crop, Gustavo Idigoras, president of the CIARA-CEC oilseed processing and export group, said in an interview. While approved in places including Argentina and China, the strain, developed by Bioceres Crop Solutions, lacks authorisation in the European Union.

The alarm follows recent rejections of Argentine soy meal cargoes by the Netherlands after testing detected the HB4 strain. While the country is the only member of the EU to reject the cargoes so far, it is a primary gateway to the trading bloc.

“Many of the importers in Europe are paranoid right now,” Idigoras said. CIARA-CEC represents powerhouses of global agriculture trading in Argentina, including Cargill Inc, Bunge Global SA, and Cofco International Ltd.

Bioceres declined to comment.

The stakes for President Javier Milei are significant: Soy exports are projected to have brought in more than US$18 billion last year. Milei desperately needs similar inflows from this year’s harvest to rebuild Central Bank reserves and signal to international bondholders that the cash-strapped nation can meet its debt obligations.

The HB4 saga comes as the South American Mercosur bloc and the EU provisionally implement a free-trade deal starting this month while the EU’s top court reviews it. The deal was 25 years in the making and faced fierce opposition from European countries with big farming industries.

To save the soy trade relationship, Argentina’s industry is effectively placing the HB4 harvest under quarantine. 

“We are working with our food safety authority to give assurances that there is a direct trip from all the farms, all the trucks, to one port without crushing facilities to avoid any problem with contamination,” Idigoras said, adding that the industry has now geo-located all HB4 soy acreage. 

“We need to convince importers and the European Commission that we are doing a very good job of having zero HB4,” he said. “So far, it is a challenge.”

Only a few thousand acres of soy fields in Argentina are planted with HB4, which is still in a breeding phase rather than full commercial roll-out. There is also a breeding programme in Brazil. But contamination represents a threat to Argentina’s full 42 million-acre crop given that the EU usually buys about one fourth of all its meal, and farmers are currently in harvest season.

The plan is to send the isolated HB4 harvest unprocessed to China, where the strain is approved, Idigoras said.

Parallel to the efforts to isolate HB4, Argentina’s government and soy exporters are lobbying the EU to allow for a certain tolerance by detectors even if Bioceres’ low-level-presence application hasn’t yet been approved by Brussels.

If Argentina can’t convince the EU that its cargoes are compliant, it would seek to relocate them elsewhere, perhaps in Asia, “but at a good price,” Idigoras said.