Argentina is one of the most important food exporting countries of the world. The country's vast central plains with their temperate climate, fertile soils and industrious farmers have given rise to a vibrant grain and oilseeds industry. For decades, Argentina has been a major exporter of wheat and maize, and in the past 20 years, it has become a major grower and exporter of oilseeds (soybeans and sunflower seeds) and especially oilseed meal and oil.
To the frustration of Argentine agribusiness and producers, over the years politics and a weak grain transportation and marketing infrastructure have conspired to prevent Argentina from realizing its full potential as an exporter of grain and other foodstuffs.
Tremendous political and economic changes are under way under the administration of President Carlos Menem, and hopes are that these changes and an even more active private sector will help bring the Argentine grain industry's reality more in line with its promise.
There are about 500,000 farms in Argentina. The average farm size is 400 ha, quite large by international standards. The size and sophistication of farms range from large estancias and modern dairies to small, labor-intensive family farms.
Most large farms in the plains region employ a land rotation system and are engaged in grain, oilseed and livestock production.
The farming community is organized into producer cooperatives that play a big role in both lobbying for farm sector interests and in the marketing of grain and purchase of inputs.
Farmers generally sell most if not all of their grain crops at harvest. One reason for this is that because production credit is very expensive, many farmers mortgage their crops ahead of time in order to get cash to purchase necessary inputs during the growing season.
The farmer delivers his grain to privately held or cooperative-owned country elevators. In addition to purchasing or storing the grain, the country elevator sells inputs and services.
Recently, the major grain companies have been establishing their own country elevators in competition with the traditional elevator operators. These companies do not provide all the services of the traditional country elevator operators, but they sometimes offer the farmer a better price.
Of course, if the country elevator is owned by a major exporting company, the further marketing of grain is simplified. Independent operators sell grain to the grain companies either directly or on the floor of the country's grain exchanges.
Millers may purchase wheat directly from farmers or more frequently from country elevators or from the grain companies.
More than half the country's wheat crop is exported. Argentine exports account for about 5% of world wheat trade, while Argentine wheat production accounts for only 2.5% of the world's total.
FARM POLICY. In November 1991, President Menem issued a decree mandating the deregulation of the Argentine economy. Through this decree, the Junta Nacional de Granos (National Grain Board), J.N.G., was abolished and with it nearly 60 years of government intervention in the grain production and marketing sectors. The J.N.G. itself was formed in 1955, but government management of the grain economy actually predated the board's creation, really beginning in the 1930s.
The power and scope of the J.N.G.'s activities and those of its predecessors have expanded and contracted with the change in governments and government attitudes toward the roles of the public and private sectors.
From 1955 until 1991, the J.N.G. served as the primary agency responsible for the administration of government programs in the grain and oilseed trade. At times it exerted almost complete control of grain exports, being the exclusive trader of grains and operating a network of nationalized export facilities. At other times, the private sector was given the opportunity to expand its domestic and export activities and, indeed, dominate the grain trade.
With the inauguration of the second Peron government in 1973, the J.N.G. became the only trader in wheat, maize, grain sorghum and sunflower seeds in both domestic and export markets. Only three years later, with yet another change in government, the grain trade returned to private hands.
In 1979, the private sector was given a green light to construct export facilities and to rent state-owned storage capacity for private use. Gradually, more and more of the export business was conducted by the private grain companies and through their privately owned export facilities.
Now that the J.N.G. has been abolished, the government is seeking buyers for several J.N.G. export facilities. At the insistence of smaller grain exporting companies, two of the country's major J.N.G. export complexes, at Bahia Blanca and Quequen, are operated by public corporations under 30-year leases. This guarantees smaller exporters access to the facilities.
During its tenure, the J.N.G. also carried out various price support programs. But, the J.N.G.'s activity in this sphere had been sharply curtailed in its final years, and prices were increasingly determined by world and domestic supply and demand conditions.
Many of the functions of the former J.N.G., for instance statistical services and monitoring private grain inspection services and export registrations, have been transferred to the Secretariat of Agriculture.
FLOUR MILLING. In 1991, wheat milled to produce bread flour was estimated at 4,228,000 tonnes, up from 4,042,000 tonnes in 1990.
World Grain's "South American Milling Directory'' lists 76 flour mills in Argentina. Most of these mills are located in Buenos Aires area. The country's milling association, Federacion Argentina de la Industria Molinera, indicated that the 20 largest mills account for about 90% of flour production.
Exports. Argentina has long-term wheat agreements with Brazil and Algeria.
There are no export taxes on wheat, maize and oilseed meal and oil. There remains a 3% export tax on oilseeds, in order to continue support of the domestic crushing industry.
With the abolition of the J.N.G., exporting is solely in private sector hands. Sixteen companies account for more than 90% of export trade.
Considerable efforts must be made to streamline Argentina's export network. While major growing areas are only about 300 km from the ports, the costs of transporting a tonne of grain from the Argentine farm, to a port is much higher than those of transporting a tonne of grain from a U.S. farm, to export terminals often more than 1,000 km away.
In Argentina, 78% of grain transport is by road, 20% by railway and 2% by river. Typical unit trains in Argentina carry only 1,500 tonnes of grain, while in the U.S. they can carry 10,000 tonnes.
Another infrastructural problem is the relatively shallow draft of the Parana River, along which most of the country's export facilities are sited. This limits the size of vessels that can be loaded.