ANALYSIS OF THE SOYBEAN VALUE CHAIN IN THE STATE OF TOCANTINS , BRAZIL

This paper aims to analyze the soybean value chain characteristics in the state of Tocantins, Brazil. The Economic Base Theory was the theoretical input, and the Global Value Chain was the methodology used. The main findings suggest that soybean is the main culture in the agribusiness of Tocantins and its production is for the global marketplace; there is no value aggregation. It was observed that a large share of public funding goes for the business agriculture, and these characteristics aren’t in accordance to the family-based agriculture standard. It is appropriate to add value to the product and to use the North-South Railway in a rational way, thus, providing competitiveness to the chain.


INTRODUCTON
The growth rates in soybean yield, along with the international prices, led Brazil to occupy a leading position in the world, becoming the second largest soybean producer, highlighting Mato Grosso as the largest Brazilian state producer, with 31.887 million tons in a cultivated area of 9519 million hectare (ha, Brazilian acronym, ten thousand square meter) with a productivity of 3350 kg ha -1 in the 2017/2018 harvest (Embrapa, 2018).
The Tocantins State has emerged on the national scene as a soybean producer.In accordance with a survey by Companhia Nacional de Abastecimento (National Supply Company) (Conab, Brazilian acronym), the soybean was established in the State of Tocantins as the main agricultural chain, covering 68.07% of 849.63 ha cultivated area in 2015, an increase by 13.5% compared to 2014.
The challenge desired for the state is to double the soybean production area in the next four years, with an increase in 25% a year, reaching 7.2 million tons and two million ha.The soybean producer groups in Tocantins State is composed of small and medium-sized farmers and represented by families coming mainly from the southern region of the country and business groups, farming from 500 to 1000 ha.(Tocantins, 2016).
The development in the soybean production and in the cultivated area is due to increase in the grain demand.Tocantins State has climatic conditions and soils that can be identified as a fundamental factor for this development.Moreover, from the 2000s onwards, the Tocantins State began using more appropriate technologies for planting, and soybeans have become the most productive grain, accounting for about 70% of the state cultivated area (Oliveira, 2018).
This paper aims to characterize and analyze the soybean value chain and its influence on the Tocantins State economy, identifying bottlenecks, governance among agents, checking the links in the Global Value Chain (inputs, production, marketing, consumption), as well as the benefits that the chain tends to bring to the region.Thus, it is understood that this study is timely and needed for knowledge of productive structure and the economic dynamics for the regional development consolidation in Tocantins State.For that purpose, this study is  (Gereffi & Fernandez-Stark, 2016).In this process, the final product possibilities are verified (Figure 1).According to Costa, Guilhoto and Imori (2013), there is lack of incentive for industrialization and value aggregation policies to the agricultural product.In the 2000s, Brazil exported, in monetary terms, about five times more soybeans grains than soybean oil; in addition, in the last 20 years, the annual growth rate of the soybeans grains exports value was 13% compared to 7% of soybean oil.

Economic base theory
The economic or export base term, according to Lima and Simões (2010), points collectively the exportable products from a region.The development of these exportable products represents a comparative advantage in regional production costs.When regions develop around this base, external economies are generated, which tend to boost the competitiveness and diversification of exportable products.The export base success determines the region growth rate, and the main factors affecting this process are changes in external demand, production cost factors, availability of inputs and raw materials, transportation, technological innovation, and government policy (North, 1977).
According to Lins, Lima and Gatto (2012), the theory of the economic or export base from where it heads towards the Itaqui harbor in Maranhão, going to the foreign market (Tocantins, 2016).At this point, there is a bottleneck, because the export base theory considers possible to produce few exportable goods, initially; however, it would be necessary to lower transportation costs to diversify the base, whose development is necessary to achieve the region development.
Regarding the Processing, data from 2016 registered Tocantins State with 2% in the country oil production capacity, and it can process 3020 tons of soybean per day; regarding the refining and container capacity, there are no records of accomplishment of these steps.
There are processing units in the city of Cariri do Tocantins, belonging to Fazendão Agronegócio Co., which processes the grain with solvent and produces deactivated soybean, flour, and degummed oil (Abiove, 2017).
In this state, there are two biodiesel industries, GRANO Co. in Porto Nacional municipality, and BIOTINS Co. in Paraíso do Tocantins municipality (Zuniga, 2015).By verbal information from an employee of the Integrated Logistics Value (contact phone, on 8 Nov. 2017) and also from the representative employee of SEAGRO Co.( contact phone, on 7 Dec. 2017), both said that biodiesel production is not occurring in industrial plants, even though there is an entire apparatus of equipment for this matter.
In accordance with Moreira (2016) North (1977), according to which, the increase in the local population requires the product manufacture implementation as a means to maintain a sustainable development.

Geographical scope
This study has the Tocantins State as geographical limit, aiming to describe the soybean value chain in this area.By the information from the Planning Secretariat of Tocantins State (SEPLAN, Brazilian acronym), most soybeans grown there do not stay in the region, it is exported: "portion of 85% of soybeans is reserved for the external market, mainly for Asia and Europe, and 15% for the domestic market.The portion sold to the domestic market can get a better value, but it is necessary to wait for the right time to sell, and sometimes the producer must sell the product to honor commitments."(Tocantins, 2016. p.123) Tocantins (2016) shows production centers, which are distributed by the state areas with different characteristics, but due to the right treatment it can be possible to develop the specific cluster (Figure 2).

LEGEND
transported by truck wagon to Pedro Afonso, at an average cost of R$ 450.00 per ha -1 .The fertilizers are acquired from the big multinationals of the segment, with a cost of R$ 600,00 per ha -1 .These costs were rolled by the COAPA Co. monitoring team (Tocantins, 2016).
Regarding sales, the main markets for soybeans from Tocantins State are China and the European Union.As the Ministry of Agriculture, Livestock, and Supply, exports to China accounted for 50.29% in 2016 equivalent to US $ 225,206,480.00.In the same year, 46% of exports was sent to the EU block for US $ 205,987,925.00.In 2017, there was an increase in the soybean complex exports to China, which received 72.16%, while for the European Union there was a decrease in 16.26% of all soybean exports (Mapa, 2018).

Governance
Significant part of the governance in the soybean value chain belongs to the production funding-holders.Rodrigues et al. (2010), analyzing the producers 'funding sources of the Santa Rosa do Tocantins region, claim that due to the rural credit scarcity and bureaucracy, the trading has become the main resource sources.A concept of trading would be that multinational companies fund the producer, thus receiving payment in soybean for export, practicing lower prices; these companies sign for contracts with fixed prices and quantities based on future price.
In Rodrigues et al. (2010) research, it was verified that 50% of the contracts carried out in the fixed price modality caused financial loss to the producers.The main trading that operate in the state have different specifications (Chart 1).It is a company that has been operating in the soybean market since 1978.In addition to the production, processing and commercialization of soybeans in the domestic and foreign markets, it has anchor products, its own production, soybean oil ABC, soybean meal RaçaForte CGG TRADING Co.
The CGG Group was created in 2010, operates in the production, commercialization and logistics of agricultural commodities in an integrated way.It has direct access to major international markets with an emphasis on Asia Source: Tocantins (2016) The provided verbal information by SEAGRO Co.'s civil servant (phone contact, on 7 Dec. 2017) is that the value of interest on the funding may reach 20% of the amount funded, representing a value well above public funding, and that the public funding is carried out mainly by Banco do Brasil and Banco da Amazônia.It was also informed that SEAGRO Co.
evaluates the product quality standard, and that this company has a grain sorter in the Pedro Afonso municipality, and that FOCOAGRO Co. also operates as a trading company in state.Rodrigues et al. (2010) state that, in the soybean production system, the relationship is well-defined, along with private credit arrangements being represented by the so-called trading, which fund 67% of the national soybean production, reaching 80% in some places.
Regarding public funding, from the point of view of the resource distribution at the national level, the average contractual values were higher in the region called MATOPIBA, in addition to Roraima and Amapá States.In all these states, the funding contractual average value was higher than the national average contractual value in soybean crop (Freitas & Santos, 2016).
Considering the comparative state data, the hypothesis raised here is that in Tocantins federation (UF) has its average contract value compared to the national average value and how much each state had in volume to be funded in the analized period (Table 2).The states of Ceará and Amapá (Table 2) show characteristics related to the two groups above discussed; the state of Ceará has an average individual funding amount of R$ 76,626.00,below the national average, closer to the southern country standard, but the total amount of resources funded in the period is small compared to the group showed, only R$ 153,253.00.The state of Amapá has an average individual contract value of R$ 567,030.00,which is closer to the standard showed in the North Central Brazil group, value that limits the access to resources to a small producer group; the total value of the available resources for the soybean crop in this state was also small in comparison to the analyzed groups (R$ 22,114,181.55).
Finally, by comparing Tocantins and Santa Catarina, states with similarities in the total resources available in the period, R$ 1,723,739,990.66 and R$ 1,273,572,877.00,respectively, and individual average contract values of R$ 471,096.00 and R$ 44,731.00,respectively, it can be concluded that in Tocantins State the soybean production model is not represented by family-based farmers, because the average contract value in this region would fund, on average, more than ten contracts in the Santa Catarina State.
Governance in the soybean value chain of Tocantins State appears as the market governance type, "The essential point is that the costs of switching to new partners are low for both parties" (Gereffi, Humphrey & Sturgeon, 2005, p.83).In this governance type, there is no dependence relationship among buyers and sellers, since price is the determining trading factor and is characterized by low specificity of assets and low uncertainty of trading, "Choosing a planting because of a particular raw material is related to the financial issue.The choice for the soybean commodity is given by the market offer and there are no incentives for planting other raw materials" (Moreira, 2016, p.72).

Socio-institutional context
According to the Brazilian Complementary Law No. 87 of 1996 (Kandir Law), exported soybeans in grains, oil, and flour were exempt from Tax on the Circulation of Goods and Provision of Services (ICMS, Brazilian acronym).However, the incidence of this tax on internal trading represents a tax distortion insofar as it favors the export of soybeans to the detriment of processing, compromising the industrial scope, and favoring the increase in idleness (Freitas, Barbosa & Franca, 2000).
According to the SEAGRO Co. civil servant (contact on 7 Dec. 2017), the State Treasury Department (Secretaria da Fazenda do Estado, SEFAZ TO, Brazilian acronym), has a decree that endorses the Kandir Law, and recently the state decided to tax the soybean exports, but, because the producers' reaction, the exemption decree was renewed.North (1977) explains that this tendency must be worked out by public policies.According to this author, there is a conservative tendency reinforced by the dynamics of capital, which is attracted to the new regions in the development phase of primary products export activities; as long as there is insufficient income to supply much of the investment capital, this region tends to rely on external sources, which will be applied to existing export activities rather than new or untested companies, conserving the current export base, even at the expense of sustainable development and full development of the region.

Stakeholders
The employee of the VLI Co.(phone contact on 8 Nov. 2017) explained that the price is set in accordance with the Chicago Stock Exchange, by which, the costs are deducted until reaching the producer; therefore, the price control is defined by the exporters, since they are the ones who buy to resell in the international market.In addition, VLI Co. has a promoting department for soybean development in Tocantins State, as the company works (through concession) transporting the product through the North-South Railway and, as the representative employee (phone contact on 8 Nov. 2017) said, most of the transported soybean is from Mato Grosso State, because Tocantins State is not able to meet the demand, and it is (Moreira, 2016).Technological innovations are indispensable for the producer region to be able to compete with other producer regions or countries (North, 1977).North (1977) stated in detail that, in new regions, such as the Tocantins State, public policies should make efforts to prevent external economies and technological development from neutralizing the decreasing in returns from the basic product, resulting in increased dependence on current export products, to the detriment of promoting changes in the exporting base.In other words, the advantages from technological actions should not reinforce the simple maintenance of the soybean export in grains, to the detriment of the product value aggregation still in Tocantins State soil.

FINAL CONSIDERATIONS
In the economic globalization process, international trade has changed considerably, occurring a fragmentation of productive processes and its geographic dispersion into value global chains.The contribution of the global value chain of the soybean from Tocantins State lies in the fact of inserting the state economy in an international trade through an export intake of this product.
Another important point is the high technology implementation for cultivating this oilseed, as well as, advanced equipment to crush the grain.This technological apparatus, along with the presence of institutions that study and show innovative solutions, such as Embrapa, can be understood as positive externalities for Tocantins State.
This chain leads to the development of several others, besides public and private investments in storage structures, grain processing, transport and export of soybean and its derivatives.Even with the whole development in the process of the soybean value chain in the Tocantins State, this crop still represents little in relation to that produced by other states in the country.Even though there is a prominent role in the agribusiness of Tocantins State, most of the soybean produced is exported in grains, which generates little internalization of the economic dynamism and little revenue for the state.
According to the perspective of North's (2016) economic base theory, soybean in Tocantins State is close to that recommended as a basic product, because it provides economic dynamism; however, the theory postulates that having comparative advantages at first, the economic sustenance begins on the basis of commodities, but it must add value to become an export product with competitive advantages; in addition, the economic results of this development must be internalized in the region, as well as, it is necessary to diversify the products of the export base to maintain sustainable development.
To generate economic effects that benefit all the local population, transforming economic growth in development, it is necessary to solve some bottlenecks such as high cost of inputs, little value aggregation (most of soybeans are sold in grains), little power to influence the price, and little internalization of the benefits of the growth of this chain (external capital).
A product industrialization has begun, the value chain of soybean from Tocantins State did not reach the last stage of the economic export base theory, which would be the value aggregation to the product, starting to export manufactured products; in addition, the grain processing (crushing) suffers from idleness.Soybean production in Tocantins State is not associated with family-based agriculture, considering that crop funding data show the contracts high values, indicating a type of funding for large producers.The southern states of Brazil, for example, have a much lower average value per contract, approaching a funding pattern for small producers.
Therefore, it is needed to add value to soybean of Tocantins State because the region shows comparative advantages for it, but it must turn them into competitive advantages and aims to internalize the gains of the soybean production chain; there is still a great need for public resources to maintain this chain with essential public policies for the construction and maintenance of infrastructure for the crop development.Most of the soybean is exported in natura, which favors a considerable waiver of taxes against the state, so, it is needed that the decision power is moved to the local players and, for that, it is needed to industrialize the chain in Tocantins State itself.
Although, soybean production is important for the agribusiness in Tocantins State, it is little representative in relation to the national production.Processing capacity is still limited, production costs has the input as the biggest bottleneck, and the expected benefits from the construction of the North-South Railroad have not yet been received.For all these situations, the soybean value chain still does not show generating, at the state level, the expected development of a commodity as defined in the economic export base theory.
organized as follows: (a) introduction; (b) description of the Global Value Chain, its characteristics and reviewing some papers that approach this methodology along with the presentation of the Economic Base Theory, which will be used to analyze the results; (c) description of the materials and methods used; (d) discussion of the main results; and (e) final considerations.The local dimensions are: (a) upgrading, which describes how producers change among the different chain stages; (b) institutional context, in which the value chain is inserted, and; (c) the stakeholders, which describes how the different local players of the value chain interact

Figure 1 .
Figure 1.Final products possibilities in the soybean chain Source: Pereira (2015)

Figure 2 .Source
Figure 2. Soybeans Production Centers in Tocantins State Source: Authors, on the basis of Tocantins (2016)Tocantins State has emerged on the national scenario in relation to grain production, and soybeans are the main crop with 2.22 million tons produced in 2013/2014(Borghi, 2014   & Oliveira, 2015).In accordance with Agro-livestock cooperative of Pedro Afonso (COAPA, Brazilian acronym), the pesticides are purchased from São Luiz mixers, Maranhão State, and Within the input-output dimension, grain transportation in Tocantins State is done through highways and the North-South Railroad.Soybeans to be exported leave the region silos and warehouses to the courtyard located in the municipality of Palmeirante, in the northern region of the Tocantins State (TO); although goods transport by railway is cheaper than the road transport, a good part of the soybean from Tocantins State moves by truck to Palmeirante, to only then shifting to the railway transport.From the soybean courtyard, it goes by train from the North-South Railroad to Açailândia, Maranhão State (MA),Brazil, supporting growth and development policies, grounded in this type of trade, generating a multiplier effect on local or nonbasic activities, according to the economic base theory.http://revistas.cefet-rj.br/index.php/producaoedesenvolvimentoRPD Revista Produção e Desenvolvimento Research in Production and Development DOI: https://doi.org/10.32358/rpd.2019.v5.358 eISSN: 2446-9580 7 , Tocantins State production has the stamp from national production, respectively.The main issue of emergent commodity industrialization (soybean) is based on the concept presented by The company purchases more than 20 million tons of grain per year and regularly interacts with customers from all continents.It is the largest exporter in Brazilian agribusiness CARGIL Co.It is considered one of the main companies in the segment, the business is based on the supply chain of grains and oilseeds (production of crude oils, degumming, refining and bottling), as well as flour MULTIGRAIN Co.It is among the largest soybean exporters in Brazil and maintains strategic partnerships in the domestic market, as well as trading the product in the main markets in Europe and Asia ABC ALGAR Co.

Table 2 .
Value contracted by state Average