Argentina is one of the world’s most important grain and oilseeds exporting countries. It is by far the biggest soymeal exporter in the world, the leading soy oil exporter, and ranks third behind only the United States and Brazil for soybean exports. It is also one of the world’s top five exporters of grain.

In its November Grains Market Report, the International Grains Council (IGC) put Argentina’s total grains production at 21.5 million tonnes in 2008-09, compared with 26.6 million in 2007-08. It estimated the 2008 wheat crop at 10.5 million tonnes, compared with 16.1 million a year earlier. Argentina’s forecast maize crop is 18 million tonnes, compared with 20.9 million a year ago. Barley production is forecast at 1.6 million tonnes in 2008, up from 1.5 million tonnes, while Sorghum production is put at 4.3 million tonnes, compared with 3.5 million in the previous year.

The IGC forecasts total Argentine grain exports at 21.5 million tonnes in 2008-09, down from 26.6 million the year before.

Total wheat exports are put at 7 million tonnes, down from 9.9 million. Maize exports are predicted to fall to 13 million tonnes from 14.7 million, while barley exports are set to rise to 1 million from 800,000 tonnes.

The U.S. Department of Agriculture (USDA) office in Buenos Aires predicts a 2008-09 soybean crop of 50.5 million tonnes, compared with 46.2 million in 2007-08. The rise is based on an increase in area to 18.2 million hectares, from 16.6 million.

"This increase in area is expected mainly due to an initial drop in planted area for corn and sunfl flowers due to high input costs and low prices, in addition to some replanting of lost wheat, corn, and sunflower area with soybeans due to drought," it said in a report published in December.

According to José Dan iel Peloni, manager of the cooperative Sociedad Agropecuaria de Correa Cooperativa and former president of the grain trade organization Aposgran, the biggest problem facing Argentina’s farmers is government policy. "We have a very high tax on exports," he told World Grain. "This is making it hard for farmers to go on. They are planting less wheat. We have a 23% tax on exports. With that tax, to plant wheat is not profitable."

The result is a sharp reduction in production. "Last year we produced 16 million tonnes of wheat," he said. "This year it will be 9.5 to 10 (million tonnes)."

Government policy would also mean reduced maize production. "The same thing is happening with corn," Peloni said. "There’s now a 20% tax on exports. Farmers are going to plant much less. Last year we produced 22 million tonnes. This year we’re expecting 15 to 16 million."

The tax rates he quoted are after a reduction of five percentage points announced recently, which hasn’t been enough to pacify farmers. According to a report in the Latin American Herald Tribune, they resumed protests against government policy on Dec. 16.

Farmers are likely to turn instead to soybeans. "With (soybeans) there’s a 35% tax on exports," Peloni said. "Soybeans are much more profitable. The other two need much more inputs. All farmers are going to plant much more soybeans," he said.

However, high costs could limit production. "Farmers are not going to use as much fertilizer on the soybean crop, so yields may not be as high," he said.

Argentina’s farm sector is as modern and efficient as any in the world. "Farmers have introduced all the new technology as all the best farmers do," he said. "They are on a level with farmers in the U.S. and Australia."

Peloni was severely critical of government policy. "The government is against farmers," he said. "Farmers receive less and less money for their crops."

The government has effectively closed down wheat and maize exports. "Exports are not open freely," he said.

He explained the effect on Argentina’s wheat balance sheet. "Domestic demand for wheat is six to seven million tonnes," he said. "The rest of the crop is exported, mainly to Brazil, which buys five to seven million tonnes each year."

However, reduced production will cut export availability. "With production this year, exports will be much less," Peloni said. "We will just have two to three million tonnes to export. It won’t be enough for Brazil. We won’t export to the rest of the world."


Even though farmers are turning to soybean production, the oilseeds sector also has complaints about government policy, according to Alberto Rodríguez, executive director of the Argentine Oil Industry Chamber (CIARA).

"We export 95% of our production," he told World Grain. "We have serious problems. We need to ask for licenses from the government. When the government says OK, we have only 45 days to

load the ships. This is very complicated for us."

The industry is also suffering from a lack of farmer selling. "Farmers are keeping their production," he said. "We think they have stocks of about 12 million tonnes of soybeans on farms. I guess they don’t like the prices."

Export taxes on wheat and corn have been reduced, but it is not enough to make a difference.

According to figures published by CIARA, total soybean crushings came to 3.58 million tonnes in 2007. For 2008, CIARA figures are only available up to September, but Rodríguez believes there has been a sharp dropoff.

"In general, we usually export around seven million tonnes as grain and the rest is crushed in (Argentina)," he explained. "This year, we have exported about eleven million tonnes (so far). I guess it could reach 12 million."

Argentina has used its big soybean crop to become a major producer of biodiesel. In 2008, it will produce more than 10% of the world’s biodiesel, making it the third-largest producer with sales in excess of $1.5 billion, according to Argentinean Renewable Energies Chamber (CAER). There are currently 18 biofuels production facilities in Argentina, a figure that is expected to rise to 30 by the end of 2009.

A recent analysis by the United Kingdom’s Home Grown Cereals Authority (HGCA) found that Argentina was expected to produce around 1.4 million tonnes of biodiesel for the export market by the end of 2008, with the majority derived from soybean oil. "However, this is set to change significantly when a planned mandatory biodiesel admixture of 5% is introduced in 2010, which will take the soya oil consumption well above the current one-million-tonne estimate," the HGCA said.


Argentina’s Milling Industry Federation (FAIM), which lists 55 member companies, put per capita consumption of wheat flour at 87 kg in 2007, up from 82 kg in 2006 and 85 kg in 2005. Total wheat flour production in 2007 was 4.397 million tonnes, 955,000 tonnes of which were exported. Brazil is by far the biggest export customer for Argentina’s wheat milling industry. In 2006 it took 65.1% of total flour exports.

According to Argentina’s Agriculture, Cattle, Fishing, and Food Secretariat (SAGPyA), there were a total of 136 mills registered at the beginning of 2007. Flour milling is highly concentrated geographically. Of the 5.862 million tonnes of wheat that were milled in 2007, almost half (2.824 million tonnes) were milled in the Buenos Aires province, while 1.269 million were milled in the Cordoba province and 581,000 in the Santa Fe province.

The industry is highly concentrated, with four companies responsible for 42% of the country’s flour output. They are Cargill, Molinos Canuelas, Andres Lagomarsino e Hijos and Jose Minetti y Cia. Of the wheat flour produced in Argentina in 2007, 54% was used in small bakeries, 17% in industrial bakeries, 8% in pasta, 10% in domestic (family) consumption, and 11% for other purposes. WG

Chris Lyddon is World Grain’s European editor. He may be contacted at: