ANALYSIS - On April 16, Argentina nationalized the assets of Spanish oil company Repsol YPF. Spain has promised quick retaliatory action, including trade sanctions, which could halt Argentine soybean exports, write Nuria Martínez Herráez and Chris Wright for TheCropSite.
Beyond the whole issue of the expropriation itself, which has already created much political turmoil in Europe, Argentina exports large quantities of soybeans and soybean meal to Spain. And a trade war has the possibility of really damaging Spanish agribusiness.
Although it seems bit early to speculate on Spain's reactions and whether the soybean trade will be affected, the Spanish agribusiness sector is clearly worried and has gone public with its concerns.
According to Spanish media sources, in 2011 Spain imported 2.5 million tons of grain and oilseeds from Argentina. The main import product was soybean meal, with a volume of 1.75 million tons, followed by soybeans, with a volume of 560,000 tons.
The rest was divided between corn, wheat and sorghum. Add to that the growing Spanish imports of Argentine biodiesel, which represent 35 per cent of Argentina's total exports of this product.
It seems that it would be difficult for Spain to replace those volumes of soybean meal.
UPA, the Spanish Union of Small Farmers and Ranchers, said that Spain imports between 3 to 4 million tons of soybean meal each year because it is the main raw material used in animal feed. Some 85 per cent of that total comes from Argentina, so the loss of this source would have serious consequences. UPA thinks it will be hard to find new export sources to replace Argentine soybean meal.
Other agricultural organizations back the Spanish government's threats of retaliation against Argentina, but they warn that Spain needs soybeans for animal feed, so they recommend finding other sources before ending trade with Argentina.
Argentina, for its part, feels justified in nationalizing its country's biggest oil producer (the move has popular support) and does not appear to be concerned about any retaliatory threats, including a trade war, on Spain's part.