## Introduction

Since the end of the 1970s the People’s Republic of China (PRC) has been growing at an unprecedented scale. The emergence of China in the world economy led it to become the second greatest economic power in 2014, following the United States (World Bank, 2016). China not only has the highest record of sustained economic growth, but it also has the world’s largest population, with almost 1.35 billion people (one-fifth of the world population). An important number of academic studies note the relationship between economic growth and changes in diet in terms of amount, composition and quality (Regmi et al., 2001; Ishida et al., 2003; Jones et al., 2003; Wang and Zhou, 2005, and Liu et al., 2009). The development process in China, the growing industrialization, the increase in the GDP per capita and urbanization have led to a change in diet and food consumption patterns. Zhou et al. (2012) show how China has increased its consumption of meat, eggs, milk, and sugar and diminished its grain consumption as the GDP per capita has increased. Thus, the PRC has become the world’s largest food producer as well as the largest food consumer in volume. These increasing changes in food consumption present an important challenge to China given that the country has only approximately 8–10% of the world’s arable land. In China, the rising demand of soybeans, which are used in animal feed (mostly pork meat production) and edible oil, the technological advancements in agriculture and the rise in soybean prices have led to an expansion in production. There has been an overall increase in the world soybean harvested area: from 20 million ha in 1960 to 120 million ha in 2013 (FAO, 2016).

Chinese economic dynamism has accelerated the process of internationalization through the “going out policy”, which was highly motivated by the pursuit of raw materials, food and natural resources to sustain industrial activity. As a result of increased Chinese demand, soybeans have become the leading commodity that is produced in the Southern Cone. Thus, the soybean case is a representative example to facilitate the understanding of the relationship between China and South America, where Brazil, Argentina, Paraguay, Uruguay and Bolivia are soybean producers. I will concentrate on the Argentine case as a high rate of the country’s harvested area is planted with soybeans, the Argentine export patterns to China are highly concentrated on soybeans, and the country is also the leading world soybean oil and soy meal producer (USDA, 2015).

The PRC’s relationship with Latin America has sparked debate in academia, governments, and the general public. In general terms, two views can be identified with regard to China’s relations with Latin American countries. One view, which is mostly sustained by the Chinese and Argentine governments, emphasizes opportunities for building win-win or mutually beneficial relations. In addition, academic works suggest the economic complementarities between both regions (with the exception of Mexico). The idea is that China’s growing demand for raw materials will present opportunities for South American countries. The increase in Chinese imports influenced the so-called commodity boom, which favoured the state revenues of the Latin American countries as well as the revenues of national and transnational companies. (Lederman et al., 2006a, b; Blázquez-Lidoy et al., 2007). Richardson (2009), based on O’Donnell (1978), also indicates that by expanding its soy exports, Argentina broke the historical wage-good cycleFootnote 1. The author links the export complex to the domestic political process and labour wages. Traditionally, Argentina’s main exports (beef and wheat) have been consumed domestically. For Richardson (2009), soy exports open the possibility of increasing exports without affecting the domestic supply of wage goods. Beef and wheat are less relevant as sources of foreign exchange, and the government can selectively restrict or discourage their export, thereby increasing real wages without provoking a balance-of-payments crisis as they can count on the soybean revenues. Nevertheless, Argentina’s deficit has increased; the soybean expansion and the government restrictions on exports of cattle and wheat have caused a drop in these sectors, which has thus affected local production and indirectly influenced domestic consumption (CRA, 2015; Strada and Vila, 2015). Furthermore, the high tendency to implement a monoculture system has critically affected the balance-of-payment with the end of the commodity boom, as the country has become highly dependent on volatile transnational finance and investment capital’s defining of commodity prices, which has thus brought to bear the full spectrum of financial speculation characteristics of the so-called global casino, as Robinson (2008) suggests.

However, the critical literature on Chinese and Latin American relations (Nacht (2012); Jenkins and Dussel (2009), Svampa (2013) draws attention to the contradictions of this process, among them, the deepening of neo-extractivism and the expansion of the agricultural frontier, which results from the growth in the Chinese demand for food and natural resources. This perspective describes it as the reproduction of a centre-periphery relationship. Although these authors recognize that China represents to the region a balance of power that limits United States and Europe presence, they also note that China represents a threat to national industries and an increasing reprimarization of the economy. In the same way, some authors have referred to these relations as a “Commodity Consensus”, paraphrasing the “Washington Consensus”, in that they consider this relationship with China to be completely based on neo-extractivist activities, enormous commercial asymmetries, the loss of food sovereignty, and environmental degradation, among other factors (Svampa, 2013; Slipak, 2013, 2014, Slipak and Bolinga, 2015).

### (1) Commodity chains: the soybean case. What do soybeans mean for Argentina? Who gets what?

At the beginning of the 21st century, there was an increase in trade between the PRC and the Republic of Argentina. During the past decade, the PRC has become the second largest Argentine commercial partner, after Brazil. According to the ECLAC, the sum of the five leading products that are exported from Argentina to China make up 85% of the total exported goods (58% soybeans, 10% soy oil); that is to say, approximately 70% of the Argentine exports to China are concentrated in soybeans or their derivatives. The Argentine balance of payments with China has been highly affected by the drop in commodity prices2. Although exports increased 84% in terms of volume from 2012 to 2015, the income in millions of dollars for the same period was 30%. Thus, Argentina did not solve the dilemma of a commodity export orientation, whereby primary producer countries suffer the economic vulnerability that is related to the volatility of commodity prices (Prebisch, 1964).

It is important to demystify the friendly win-win Chinese diplomacy statements that have been made in the bilateral agreements between the PRC and ArgentinaFootnote 2. In contradiction to them, the bilateral commerce presents an increasing deficit in the balance of payments; from 2008 to 2014, Argentina accumulated US$18.2 billion in deficits with the PRC (INDEC, 2015). Considering the period from 2011 to 2015, it is clear that although China is the first worldwide soybean importer and soymeal and soy oil consumer (USDA, 2015), the PRC does not appear on the list of leading soy meal importers, not even the top 10. Regarding soy oil imports, China is in second place following India. However, while India has increased its imports year by year, China has decreased its soy oil imports. At the same time, China is increasing its own soy oil production (USDA, 2015). Thus, it is clear that the Chinese preference is to buy raw materials with less value in favour of its own soy crushing industry (USDA, 2015). Another aspect of Chinese protectionism is the implementation of a 9% tariff for soy oil imports (although it is 10% less than the US tariff, which is currently 19%) (Fried, 2012). The story of soybean production in Argentina began in the 1970s, and production increased rapidly in the 1990s, when genetically modified (GM) soybean varieties began to be commercialized in 1996.4 This type of GM soybean was engineered to be herbicide resistant (primarily to the RoundUp Ready brand glyphosate). Today, 63% of the harvested Argentine land is planted with soybeans, as is shown in Fig. 1. This commodity has very low domestic consumption, and its export revenues represent 31.8% of Argentina’s export income (INDEC, 2016). In this section, I will analyse the distribution of gains in the Argentine portion of the commodity chainFootnote 3 (Hopkins and Wallerstein, 1977,1986; Arrighi and Drangel (1986). According to Hopkins and Wallerstein (1994) a commodity chain describes the network of processes and labour that generate a product. Each of these processes constitutes a “node” in the chain, and whoever commands the majority of the activities that generate a surplus establishes the core. In this conception, profitability is directly related to the degree of monopolization. What the authors essentially mean by core-like production processes is those processes that are controlled by quasi-monopolies. By tracing the networks of commodity chains (CC), one can track the ongoing division of labour and the documentation of the patterns of the capitalist world economy (Hopkins and Wallerstein, 1994). Thus, world-system theorists are interested in how CC structures reproduce a stratified and hierarchical world-system (Bair, 2005). By describing the segments of the production agents and paying considerable attention to the extent of monopolization in each of the nodes, the description of this CC will shed light on “who gets what” in the Argentine soybean production. An entire scheme of the Argentine portion of the soybean commodity chain is presented on page 5, and the following explanation describes the actors and the degree of monopolization of the “boxes”. A report of the National News Agency TELAM (2014) explains that a soybean yield is measured per quintals that are harvested per hectare. The average in Argentina is 30qq/Ha. Figure 2 explains the distribution of income considering a soybean price of USD540 per ton and a 400 Ha farm, which sums a gross earnings of$628.800. Of the $628.800, 35% goes to the state ($220.000); 43% goes to the renter ($270.000) and 22% goes to the owner of the land ($138.000). The soybean profitability is 34%, which makes it one of the most profitable businesses in Argentina (TELAM, 2014).

Elaborated by the author based on MECON (2011), Dabat (2012). Note: Data correspond to 2010. Percentage of the Volume.

Today, despite the reduction in soybean prices ($329 in March 20166) soybean farming is still one of the most profitable activities in the countryFootnote 4 (Infocampo, 2016, 2017). According to Ainsuain (2008), the census of 1903 shows that 35 traditional landowning families owned most of the land. The census of 2008 indicates that 30 of these 35 same families still own a large percentage of land. Among them is the Anchorena family, with 40,000 Ha, and Gómez Alzaga with 60 thousand Ha. In the 2002 census, the 936 most powerful landowners had 35.5 million Ha; however, 137.021 producers had 2.2 million Ha. Just four landowners have roughly the same amount of land as the small producers, which is 1.85 million Ha (a territory that is comparable to that of Belgium): Benetton (900,000 Ha), Cresud (460,000), Bunge (260,00) and Amalia de Fortabat (220,000). The tendency towards land concentration has worsened over time8 . Agricultural censuses from 1952 to 2008 in Argentina show a sharp decline in farms that are owned by individuals and an increase in the acreage sizes of farms that are owned by traditional landowning families and other larger players in agriculture investment such as transnational companies. A total of 22% of the soybean revenue goes to the landowner. Because land ownership is highly concentrated, the landowners are the main beneficiaries in the soybean trade. There are several ways in which the land concentration process occurred in Argentina: 1. 1 Small producers sold their land: Those without capital to produce for themselves rented out their land to other farmers or planted pools through contractual leasing or sharecropping (aparceria and medieria) (Giancola et al., 2009). 2. 2 The professionalization of agribusiness: Farmers who owned capital to rent the farms of smaller farmers increased their production. Some farmers diversified their activities by investing in machinery. Others sent their family members for advanced training in university agricultural management programmes so they use they could in turn use the knowledge to professionally run their farms (Grosso et al., 2010). Traditional agribusiness families that own large extensions of land generally have a rural background. Their families have been in agribusiness for at least two generations. These families improved their business management in agriculture by investing in different activities in the commodity chain such as offering consulting services and producing agrochemicals (Grosso et al., 2010). 3. 3 New actors: The new types of “tenants” are the planting pools and the agricultural investment funds. The formers are generally an association of producers (owners or contractors) who join together to negotiate services and prices to commercialize their grains or to exercise control over the whole production process. There are different types of aggrupation and contracts, and most of them follow a joint venture model. They have different sizes of planting pools, which range from a thousand to 50,000 Ha. The agricultural investment funds act in a manner that is similar to any other financial investment fund; the investors invest and leave the management to the administrators. According to Grosso et al. (2010) the investments are at least$ 500.000.

4. 4

The foreignization of the landownership: In Argentina, 15 million ha are owned by foreigners, which is 5.6% of the territory. This represents a percentage increase in some of the most productive areas (RNTR, 2016). Along the same lines as the core transnational companies, the Chinese companies are buying land in Latin America. According to Inter American Dialog (2015) China planned to buy 444,000 Ha in the Cordoba and Rio Negro Provinces in Argentina. Although these purchases are still not confirmed, or they may have stalled, they correspond to an increasing tendency in Latin America.Footnote 5

Farmers with capital, farming pools and agriculture investment funds have rented more than a 60% of the land (Telam, 2014). Therefore, the issue of land ownership and the capital to rent large areas determines the incomes of the actors. In Argentina, despite the diversity of the actors, 50% of the production was controlled by 2.6% of the total producers in 2010 (Socioenviromental Soybean Observatory, 2014). Figure 3 shows the stratification of the production in terms of volume (tn). Figure 4.

It is important to underscore that “For each 1000 Ha, the soybean crop employs 15 workers while for the same size the sugar cane crop employs 350 workers and the citric crop employs 1,300 workers” (Telam, 2014). According to Fascendini (2006) in the Buenos Aires Metropolitan Area 8 of 10 unemployed persons come from the agriculture sector. As soybean farming is highly mechanized, an increase in agribusiness has resulted in the displacement of rural communities to larger cities.

In summary, a high concentration in soybean production by landowners (national and transnational) and producers (national and transnational) implies a high concentration in gains in the soybean chain.

However, of the cost of soybean production that must be subtracted from the 43% that goes to the renter ($220.000); part goes to the seed companies, fertilizer companies, machinery sellers, and it is also used to pay for labour, gasoil and service companies. The GM soybean varieties that began to be commercialized in 1996 in Argentina were fundamental to the increase in the soybean crops worldwide. Monsanto owns the intellectual property rights (IPR) of the Soybean GM and the herbicide. Filomeno (2014) suggests that the powerful and influential Argentine rural producers have pressed the state for cheap access to foreign technology. Thus, the state has a permissive intellectual property regime for the use of seeds. Argentina continues to be the only country that does not pay IPR fees to Monsanto in the Southern Cone. Nevertheless, at the end of 2015, Monsanto initiated the strategy of collecting royalties by using crushers and exporters to charge farmers$15 per metric ton. This amount was connected to the second generation of GM soybeans, the “Intacta RR2”. All of the exporters have signed agreements to collect royalties under the threat that Monsanto will not sign a “biosecurity certificate,” which is a condition to export soybeans to China. Thus, export companies included a “biotech clause” in the “forward” contracts for the soybean harvest 2015/2016 that controlled the soybeans under the IPR and not under the Argentine Seed Law (Pagina 12, 2016c; GRAIN, 2015). Conflicts in royalties and the validity of the Seed Law or the IPR continue between seed companies, farmers, exporters and the state.

These GM soybeans were engineered to be herbicide resistant (primarily to the RoundUp Ready brand glyphosate); thus, the incorporation of GMOs and the no-tillage system in the 1990s led to an increase in the use of fertilizers and herbicides. The average of amount of glyphosate that was used in 1996/1997 was 3 litres/Ha. Notwithstanding, in 2013 Argentinian farmers used 12 litres/Ha, which was generally potentiated with other herbicides such as graminicides and hormones (Socioenvironmental Observatory, 2014). According to the Argentine Chamber of Agricultural Safety and Fertilizers the principal herbicide in terms of income is Glyphosate (64%). The main companies that operate in the country are Monsanto-Bayer10, Syngenta, BASF, Dow Agrosciences, Advanta, Bayer Cropscience, Nidera, DuPont, Nufarm, Merk and Repsol-YPF. However, in this market there are also some medium-sized local and international firms, which produce and/or import and distribute agro-chemicals (Regunaga, 2009).

## Conclusion

Depicting the Argentine portion of the soybean commodity chain, I presented data on how the patterns of the world economy are reproduced. There is high monopolization and foreignization of soybean production and commercialization. Starting with landownership, as the census showed, there are fewer farms with higher acreage. The production is highly concentrated, with 2.6% of the producers controlling 50% of the total production. There are 10 leading exporters, the majority of which are transnational companies. In addition, six firms handle 93% of the crushing capacity. The US companies and other core countries companies have a large presence in the most profitable and monopolized nodes of soybean production and export. Thus, the core countries control the most profitable processes. It is important to note the increasing Chinese role in attempts to gain some of these spaces. As China has become a global player in genomics and agrochemicals, that is, buying Nidera, Syngenta, Atanor, producing 40% of the world supply of generic glyphosate, among others, the PRC has reproduced the same patterns as those of the core countries. Thus, China is not presenting a sustainable model for world food production.

Despite the friendly diplomatic statements of the PRC, there are important asymmetries in trade; for example, Argentine exports are highly concentrated on a few raw products, and the trade deficits have constantly increased. The soybean case is a representative example for an analysis of bilateral trade. A total of 68% of Argentine exports to China are concentrated on soy and it derivatives. Moreover, Chinese glyphosate is one of the leading products that is imported by Argentina. China is decreasing its soy oil imports and simultaneously increasing its production, which suggests that the country has a clear preference for buying raw materials at a lower value in favour of its own soy crushing industry. China’s increasing trade with Argentina in the soybean sector follows the existing structure of a global commodity chain and does not offer much space for progressive change in Argentina’s political economy. The presented data demystify expectations about China as an alternative globalizer that could bring greater benefits to the global South than the traditional core countries have.

The dilemma of the volatility of the commodity prices that were noted by Prebisch in the 1940s continues. Although exports have increased 84% in terms of volume from 2012 to 2015, the income in millions of dollars for the same period was 30%. The fall in commodity prices confirms the importance of the US economy and macroeconomic policies and their impact on the world economy. The increase in world financial speculation and its crisis has influenced the accumulation process and the productive sector. The weakness and instability of commodity prices continue to be a structural characteristic of the world economy, fundamentally affecting the periphery and the semiperiphery.

The structural conditions in Argentina, and the semi-periphery status, still prevail in the economic, political and social spheres. The agrarian structure is similar to that of the 19th century in that the traditional families still have influential economic power. The contemporary globalization wave that began in the 1970s and consolidated in the 1990s has increased the role of the transnational companies in all of the nodes of the soybean commodity chain. However, at the same time, the Argentine state has promoted investments in science and technology in the agriculture business (such as the promotion of the biotechnological sector), encouraged national cooperatives and companies to increase their participation in soybean export, and blocked the legislation of IPR. Thus, the state has tried to avoid a periferization, conserving its semiperipheral status.

The Argentine soybean harvested area of 63% constitutes an entirely export-orientated commodity that has low domestic consumption. There are contradictions in the “progressist” government agenda such as the maintenance of the agribusiness development path based on the promotion of monoculture, which endangers environmental and human health and excludes small farmers, labourers, and indigenous people. Its structural limits have deepened with the falling prices of soybeans, the weak balance of payment equilibrium and the increasing disputes over the distribution of profits. The incapacity to change the structural conditioning to develop core activities is clear.

The CFK progressive government failed to stop soybean expansion, and, as a result of the drop in the economic growth rate that was associated with the falling commodity prices combined with the international block to obtaining financial credits because of the “Hedge fund” conflict, among other reasons, the government was put in check by various fronts: the conservative and transnational forces sought to retain their profitability and forced the government to make economic adjustments and an economic transfer to the concentrated sector to promote an increase in its profits. The poor economic performance generated discomfort among sections of the middle class. Social movements criticized the government for forgetting the socio-environmental issues and the consequences that are related to soybean crops. The distributive conflict increased the contribution to the social confusion that led to a right wing recovery in 2015, which resulted in the election of Mauricio Macri as the Argentine president, which has been considered to be a new neoliberal lunge.

The Macri’s presidency did not suggest a clear strategy with regard to Chinese bilateral relations. During the first year of Macri’s presidency, the government changed the yuan-SWAP into dollars (Pagina 12, 2015a), tried to stop and review infrastructure projects such as the two hydropower plants in the Patagonia that were financed by China (Pagina 12, 2015b), and sank a Chinese ship that was fishing illegally in Argentine waters (Pagina 12, 2016b). The Chinese investment projects had a default clause, which was that when one project is stopped, all projects will stop (Pagina 12, 2017b). Additionally, the PRC reduced its soybean imports from Argentina as a way to pressure the country. An economic report of the Argentine Agriculture Council in China showed that during the first 7 months of 2016, the PRC imported 4.1% more soybeans from other countries, and it diminished by 29% its soy imports from Argentina. To reverse this situation, president Macri visited China in May 2017 and re-signed 10 agreements that China had already agreed with CFK and arranged 6 new deals (Pagina 12, 2017b). The Argentine strategy with regard to China is unclear and inclusive considering that Macri’s company group, which is led by Franco Macri, the president’s father, is one of the most important Chinese partners in Argentina, that is, it represents Chery and DFSK in the country (Clarin, 2017).

What will happen in the near future is uncertain. Nevertheless, I can identify some key factors that will influence the soybean commodity chain, such as Trump’s macroeconomic policies that would probably increase US interest rates and the relative value of the dollar, which would hence affect commodity prices. Other factors include the current rate of Chinese growth, the contradictory bilateral relations between Argentina and China, and the inner social and political conflicts within Argentina, the United States and China, which may further compound this uncertainty.

## Data availability

The datasets analysed during the current study are available in the Dataverse repository: http://dx.doi.org/10.7910/DVN/DAV4EI. All data were originally obtained from publicly accessible websites.

These datasets were derived from the following public domain resources: Argentine National Statistic Institute INDEC http://www.indec.gov.ar National Agricultural CENSUS. http://www.indec.gov.ar/nivel4_default.asp?id_tema_1=3&id_tema_2=8&id_tema_3=87 USDA United States Department of Agriculture Foreign Agricultural Service https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery Argentine Ministry of Finance http://www.economia.gob.ar TELAM, Argentine National Press Agency, 2014. http://www.telam.com.ar Worldbank http://databank.worldbank.org/ddp/home