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ARGENTINA: Experts Optimistic, Farmers Cautious on Grain Harvest

Marcela Valente

BUENOS AIRES, Nov 1 2010 (IPS) - Agricultural analysts are predicting a strong grain harvest for Argentina, where soy, maize and wheat are among the engines driving the national economy. But farmers are more circumspect as they plant this year’s crops in the southern hemisphere spring season.

With production predicted to reach 100 million tonnes for the three grains, Argentina is one of the world’s leading suppliers, alongside China, United States, Brazil and Russia, among others.

“The world is very balanced in the scheme of supply and demand for the three grains, and the prices — although they don’t reach the peak of 2008 — are seeing a major increase,” Gustavo López, analyst with the private consultancy Agritrend Argentina, told IPS.

The combination of high volumes of production and “spectacular” prices, which could continue to rise, point to a very good 2011, said the expert.

In an estimate he considered “very cautious,” grain exports for the next season could reach 28.7 billion dollars, which mean export tax revenues of 8.4 billion dollars for Argentina’s coffers.

Those taxes were the focus of an extended conflict between the government of President Cristina Fernández and agri-business leaders in 2008, when the authorities tried unsuccessfully to boost the tax during the best farming year in recent decades.

According to the Ministry of Agriculture, Livestock and Fisheries, the agro- food sector — which includes agriculture and the food industry — represents 30 percent of Argentina’s gross domestic product (GDP) and 54 percent of exports.

Unlike the cattle sector, which is on the decline, farming is in the midst of a good period.

Although there are enormous gaps between the large farming operations and the small farms and rural workers (both informal and formal), a good harvest benefits the entire sector.

Mariano Lamothe, an economist with the private consultancy Abeceb, confirmed the current trend. “They aren’t the prices of 2008, but there is a strong recovery that will allow a 33-percent increase in the value of production,” he told IPS.

The opinion at Abeceb is that greater dynamism in price recovery has been proved by wheat, whose prices jumped 56 percent between September 2009 and September 2010. Maize saw a 22-percent price increase in the same period.

According to López, these changes can be explained by a tight supply. This month, wheat reached an export price of 300 dollars a tonne, he said.

“Russia, Kazakhstan and Ukraine were the first in global exports of wheat, but with the drought in that region their production fell from 115 to 85 million tonnes,” the expert pointed out.

Argentina’s wheat has already been planted, and the 2010-2011 harvest could exceed 12 million tonnes, according to last week’s figures from the Buenos Aires Grain Exchange, a non-profit in which the sector’s various associations are represented. Argentina is second in the world for wheat exports.

In the case of maize, López explained that the harvest in the United States, a leading producer, will not be as good as was expected. Furthermore, an increasing percentage of the U.S. maize harvest is being dedicated to ethanol production.

The maize export price, according to the Agritrend analyst, is 230 dollars per tonne, a “spectacular” sum that he says demonstrates an 80 percent recovery in little more than a year.

Argentina is the world’s second leading maize exporter, after the United States.

But the undisputed superstar grain for Argentina is soy. The Ministry of Agriculture estimates that the next growing season — from November to March — could see a harvest that surpasses 52 million tonnes.

That volume would make Argentina third in the world for soy exports. China, the top global buyer of the legume and its products (flour and oil), will boost its purchase this year from 50 to 55 million tonnes.

The Asian giant has more than 100 million hectares planted in soy, but that is not enough to meet domestic demand, as a large portion of the crop goes to hog feed.

López agrees with the official soy projections coming from the Ministry of Agriculture, though he predicted the possibility of lower yields if there is less rainfall as a result of the cyclical climate phenomenon known as La Niña.

Soybeans, he said, represent 75 percent of the grain business and are already being marketed for next year at 450 dollars per tonne.

IPS consulted farmers from the Argentine Agrarian Federation, an umbrella of small farm operations. They are more cautious about the future because the soy harvest is several months away and a great deal depends on the weather.

Omar Príncipe, a farmer from Villa Eloísa, in the central province of Santa Fe, owns 25 hectares and rents 50 on which he grows different grains, depending on the season. His first harvest of soy last May saw lower prices.

Now he is growing sorghum, maize and sunflower, and will begin planting soy in early November.

“With those prices we have a very good chance. We have to wait and see if the weather holds up and if the crops develop well,” he said.

Ariel Toselli, who farms 200 hectares in the province of La Pampa, west of Buenos Aires, is optimistic, but said it is still too early to celebrate.

“You never know with farming. We are coming out of a drought and hoping for rain because there is still not enough moisture, but for the moment we are working on maize, sunflower, and soon we will be planting soy,” he said.