Bolivia is one of the world’s top soy producers. The commodity is crucial for its economy, but yields are relatively low. Local bank Banco Fie is working with Rabobank to help change that, strengthening its position in the value chain in the process.
The Bolivian economy has seen strong growth in recent years, with agriculture performing particularly well. Soy is the country's most important agricultural product: it represents 3% of GDP and 10% of exports, and generates 45,000 direct and 65,000 indirect jobs. Compared to soy giants like Brazil, Argentina, and the US, however, Bolivia remains a small player.
Towards more sustainability
Worldwide demand is robust, and players in the Bolivian soy value chain, from the government to smallholders, are keen to see yields increase sustainably. Local bank Banco Fie is no exception. Fie is already an important lender to Bolivia’s farm sector and wants to expand its role in various value chains, including soy.
“There is huge diversity among farmers”- Dominic Terberg, agribusiness expert at Rabo Partnerships
Rabobank is supporting Banco Fie's efforts to formulate a new agribusiness strategy. Dominic Terberg, agribusiness expert at Rabo Partnerships, travelled to Bolivia in February 2018 with soy specialist Victor Ikeda of Rabobank Brazil to analyze the local value chain. Terberg: “It's fascinating to speak to all the players in a value chain, to hear what the challenges are, and hopefully contribute to improving the sector and making it more sustainable.”
Terberg is involved in a three-year project to devise an agribusiness strategy that will enable Banco Fie to serve the Bolivia’s main agricultural sectors in a more sustainable way. The strategy encompasses market and sales development, building a strong team, and assessing the creditworthiness of agricultural clients.
Many farms that are active in soy, are smallscale
A concentrated area
Some 95% of Bolivia’s 1.2 million hectares of soy fields lie in the region of Santa Cruz in the south east of the country. Most of the roughly 14,000 Bolivian soy farms are small, with an average of 300 hectares each, but the farmers often work together in communities.
The government is converting part of the country's pasture land for soy production. It is also urging farmers to adopt more effective, and thus more sustainable, methods. Farmers are increasingly using zero or minimal tillage together with crop rotation to protect the land against exhaustion and desiccation. However, notes Terberg: “There is still huge diversity among the farmers. Some still use traditional methods, while others already grow soy in a modern way.”
One of the greatest challenges for soy farmers is the weather. The climate east of Santa Cruz is dry, while the northern regions face the risk of flooding. Large farmers will usually have the financial means to put the right infrastructure in place, but this is much more difficult for smallholders. That is where the government, Banco Fie, and, for example, Rabo Foundation, could play a significant role.
Watch Dominique Terberg in Santa Cruz