Sun, Sep 07, 2014 - Page 14 News List

Argentina could see grains surge if next president opens market

Farmers in Argentina, the world’s No. 3 soybean exporter, are hoping the next president would remove export taxes to make their crops more competitive with world leaders the US and Brazil

By Hugh Bronstein  /  Reuters, BOLIVAR, Argentina

Soybean plants are harvested at a field in the city of Chacabuco, Argentina, on April 24 last year.

Photo: Reuters

Grains powerhouse Argentina could increase soy, corn and wheat output by as much as a fifth if the president elected next year scraps export quotas, eases taxes and reverses other policies that have slowed investment, farmers and commodity traders say.

Relations between growers and Argentine President Cristina Fernandez are riven by disagreements over interventionist policies that farmers say have sapped profits, hurt the currency and helped fuel one of the world’s highest inflation rates.

Argentina is the world’s No. 3 soybean exporter and the top supplier of soymeal livestock feed, much of it shipped to Asia. It is also a major exporter of corn and wheat.

However, its farmers have been stung by government policies and this year’s dive in global grains prices caused by US bumper crops. Their main hope is that whoever wins the election in October next year will ease the pressure and help them capitalize on growing world food demand.

“What we need is a free market and consistent policies that allow us to plan and invest,” said Pedro Vigneau, the fifth generation of his family to work a 1,400-hectare farm near the town of Bolivar in the breadbasket province of Buenos Aires.

The early election front-runners are more market-friendly than leftist Fernandez, who in July presided over Argentina’s second bond default in 12 years. She has led Argentina for two terms and is constitutionally barred from seeking a third.

Mauricio Macri, mayor of Buenos Aires and one of the front-runners, has promised to abolish wheat and corn export curbs and phase out Fernandez’s 35 percent tax on soybean exports.

Neither the US nor Brazil, which jostle for rank of top soybean exporter, tax exports.

“Export taxes will be immediately eliminated on all products accept for soy, which will be done gradually,” Macri has said, also vowing to turn agriculture into “a true motor for economic development” by making corn, wheat and sunflower farming more profitable.

Other candidates with high approval ratings, like Buenos Aires Governor Daniel Scioli and Argentine Congressman Sergio Massa, echo Macri’s investment-friendly stance, but so far have shied from offering such specific farm policy plans.

“Any of the three would try to shift agriculture policy toward a more free market orientation,” said Mariel Fornoni, a partner at the Management and Fit political consultancy.

Vigneau said his farm’s grains and oilseed output could shoot up 20 percent to about 3,780 tonnes if the next government scraps export taxes and quotas.

It is an assessment echoed by other farmers and grains traders. Should the next president take a serious stab at policy reform, they say total grains and oilseed output would grow quickly from today’s base of about 100 million tonnes per year.

“Today we would be at about 125 million tonnes if we were free of these government interventions,” said Ernesto Ambrosetti, chief analyst at the Argentine Rural Society, which represents some of the country’s biggest farms.

Overall grains and oilseed output has climbed over the last decade thanks to farmers’ embrace of no-till planting techniques and genetically modified seeds that increase yields.

Still, two Buenos Aires-based grains traders agreed that Argentina continues underproducing by about 20 percent.

Agriculture consultant Pablo Adreani is factoring a change toward “more logical policies” into his crop forecasts for 2015-2016.

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