Argentina is one of the world’s most important producers and exporters of grains and oilseeds. Its position, in southern South America, means it plays an important role as a supplier of grains when no new production is coming from the Northern Hemisphere.

The International Grains Council (IGC) forecasts Argentina’s total 2012-13 grains crop at 47.1 million tonnes, up from 44 million the year before. The IGC puts the wheat crop at 11.5 million tonnes in 2012-13, compared with 14.5 million tonnes the year before.

“Recent rains brought some relief to previously dry parts of central Argentina, especially in north-eastern and southern Buenos Aires province, but cooler weather slowed crop development,” the IGC said in its Grain Market Report in August. “With sowing complete, the area is forecast to fall by 18%, to 3.7 million hectares, contained by competition from more profitable crops and dryness during planting in northern areas.”

A U.S. Department of Agriculture (USDA) attaché report on the sector highlighted problems created by government policy.

“Several analysts project an even greater drop, but many producers do not have many alternatives and others need to plant wheat as a cash crop to help finance the soy and corn crops,” it said. “Producers are disorientated and discouraged as the government is expected to continue to control the local wheat market in order to keep the domestic market well supplied.

“The government will reserve 7 million tonnes for the local market and the balance will be allowed to be exported without tranches. Producers claim that this system is making difficult the commercialization of the crop (many still have wheat from past seasons), and prices suffer a significant discount due to the lack of competition between local flour mills and exporters.”

Most area losses will be in the rich corn belt, where producers will prefer to plant first soybean crop instead of double cropping with wheat, the report said.

“In the center and southern Buenos Aires province, the area is projected to fall marginally as there are fewer production alternatives. A large amount of the area lost to wheat will be primarily planted with barley. Other minor alternatives that are expected to increase are canola, peas and chickpeas.”

Corn production in Argentina is expected to recover to 25 million tonnes in 2012-13 from 21 million the year before, according to the IGC. “With sowing in Argentina due to start in September, farmers remain concerned about recent low revenues, rising costs and earlier dryness in some regions,” the IGC commented. “However, producers are likely to be encouraged by current high prices, which may restrict the drop in plantings to around 5%.”

The IGC based its increased estimate on predicted increased yields per hectare.

“Despite a significant drop in area, final production is forecast to be higher than crop 2011-12, which was badly affected by a drought during the critical flowering stage,” said the attaché. “Although it is still too early, the current wet autumn and forecasts of El Niño for the end of the year, which in this area means rainfall above average, could result in good yields.”

Argentina is also set to produce 5.6 million tonnes of barley, up from 4.1 million in 2011-12 and 4.5 million tonnes of sorghum, up from 4 million, as well as 400,000 tonnes of oats, up from 300,000.

“Producers are finding barley a very good alternative to wheat as the government does not intervene in barley marketing,” the attaché said. “Planted area is expected at 1.5 million hectares, a 50 percent increase, and the highest of the past 50 years.”

“Producers had two consecutive very good barley crops, with higher prices than wheat and with no restrictions to sell. With expected prices and average yields, returns are likely to be higher than wheat. Producers are finding barley a very good alternative to wheat as the government does not intervene in barley marketing. Planted area is expected at 1.5 million hectares, a 50% increase, and the highest of the past 50 years. Producers had two consecutive very good barley crops, with higher prices than wheat and with no restrictions to sell. With expected prices and average yields, returns are likely to be higher than wheat.”

The IGC’s predictions for 2012-13 put Argentina as the second largest grain exporter in the world, trailing only the United States. It is set to send a total 29.6 million tonnes abroad, down from 31.9 million tonnes in 2011-12. The total includes 7.2 million tonnes of wheat, down from 11.8 million, and 16 million tonnes of maize, up from 8.5 million.

Argentina is also expected to export 4.1 million tonnes of barley in 2012-13, up from 3.3 million the year before and 2.3 million tonnes of sorghum, up from 1.4 million.


The USDA attaché has also reported that ethanol production from grains is expected to grow strongly with two plants under construction, two ready to begin construction, and several other projects set to begin production after 2014.

Ethanol is already produced in Argentina, but it is exclusively based on sugarcane and molasses.

“The two plants under construction are expected to begin production in late 2012 and be at full capacity in 2013,” the report said. “The other projects, of large capacity, would begin production in mid-2013. The owners of these four plants include a large local processor, a foreign grain trader and processor, a group of farmers and a large local cooperative.

“Early estimations set corn (and at a smaller extent sorghum) consumption for crop 2011-12 at 100,000 tonnes and 600,000 tonnes for 2012-13. From then onward, we should see increased corn demand as more capacity is built in. The interest in ethanol is currently very big as the country is expected to need to import more oil and energy in the future. Ethanol plants can source corn locally at a discount (due to the 20% export tax) and benefit from a profitable price scheme under the official biofuels mandate, which sets gasoline to be mixed with 5% ethanol.”


Argentina is one of the world’s largest soybean producers and exporters. The IGC predicts a record crop of 54 million tonnes in 2012-13, up from 40.1 million tonnes the year before. Its soybean exports are put at 13 million tonnes, up from 7.9 million. It’s also expected to import 300,000 tonnes. The IGC pointed out that the Argentine government had announced in August that it would allow imports to make more use of crush capacity.

In 2012-13, the IGC expects Argentina to more than compensate for a fall in U.S. soy meal exports. Its sales are forecast at a record 28 million tonnes, up from 25.4 million, accounting for more than half of world trade.

“Crush will also increase as demand for soybean oil for domestic use in biodiesel production will jump 30%,” the report said.

It forecast an increase in soybean area for 2012-13 to 19 million hectares, up 400,000 on the year. “This area will mostly come from area previously planted with corn,” it said. “After a hot and dry year that did some major damage to the corn crop, producers indicate that they will stick with the ‘safe’ crop — soybeans. Input costs for soybeans are lower than for other commodities and although export taxes are high, there are no export restrictions or quotas for soybeans as there are for grains.”


The Argentina milling industry association, Federación Argentina de la Industria Molinera, lists 94 miller members. According to the association, in calendar 2011 some 6.46 million tonnes of wheat were processed to make 4.84 million tonnes of flour of which 1.02 million tonnes were exported, with domestic consumption at 3.8 million tonnes. Annual average flour consumption per person is 95 kilograms.

According to the IGC, Argentina is one of the world’s biggest exporters of flour. It is set to send 1.2 million tonnes abroad in 2012-13, compared with 1.286 million in 2011-12.

The government has put in place a system under which it reserves 7 million tonnes of wheat for the milling industry.

“The government expects with this system to improve the price paid to farmers, but many doubt this will be the case this year,” the attaché said. “Even though Argentina’s wheat presence in Brazil has fallen significantly in the past few years, it is still by far the main destination for both wheat and wheat flour, with approximately 60% of total exports. Other markets for wheat are countries in southern and northern Africa and South America. Some exports of flour are also expected to go to neighboring Bolivia.”

Key Facts

Capital: Buenos Aires

Population: 42,192,494 (July 2012 est.)

Religions: Nominally Roman Catholic 92% (less than 20% practicing), Protestant 2%, Jewish 2%, other 4%.

Location: Southern South America, bordering the South Atlantic Ocean, between Chile and Uruguay.

Government: Republic. Chief of state and head of government: President Cristina Fernandez de Kirchner (since Dec. 2007).

Economy: Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Although one of the world’s wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt and capital flight. A severe depression, growing public and external indebtedness, and a bank run culminated in 2001 in the most serious economic, social, and political crisis in the country’s turbulent history. Interim President Adolfo Rodriguez declared a default — the largest in history — on the government’s foreign debt in December of that year, and abruptly resigned only a few days after taking office. His successor, Eduardo Duhalde, announced an end to the peso’s decade-long 1-to-1 peg to the U.S. dollar in early 2002. The economy bottomed out that year, with real GDP 18% smaller than in 1998 and almost 60% of Argentines under the poverty line. Real GDP rebounded to grow by an average 8.5% annually over the subsequent six years, taking advantage of previously idled industrial capacity and labor, an audacious debt restructuring and reduced debt burden, excellent international financial conditions, and expansionary monetary and fiscal policies. Inflation also increased, however, during the administration of President Nestor Kirchner, which responded with price restraints on businesses, as well as export taxes and restraints, and beginning in early 2007, with understating inflation data. Cristina Fernandez de Kirchner succeeded her husband as president in late 2007, and the rapid economic growth of previous years began to slow sharply the following year as government policies held back exports and the world economy fell into recession. The economy has rebounded strongly from the 2009 recession, but the government’s continued reliance on expansionary fiscal and monetary policies risks exacerbating already high inflation.

GDP per capita: $17,700 (2011 est.); inflation: 22% (2010 est.); unemployment: 7.2% (2011 est.).

Currency: Argentine pesos (ARS): 4.68 pesos equal 1 U.S. dollar (Sept. 21, 2012).

Exports: $84.27 billion (2011 est.): soybeans and derivatives, petroleum and gas, vehicles, corn, wheat.

Imports: $70.73 billion (2011 est.): machinery, motor vehicles, petroleum and natural gas, organic chemicals, plastics

Major crops/agricultural products: Sunflower seeds, lemons, soybeans, grapes, corn, tobacco, peanuts, tea, wheat; livestock.

Agriculture: 10% of GDP and 5% of the labor force.

Internet: Code: .ar; 10.928 million (2010) hosts and 1 13.694 million (2009) users.

Source: CIA World Factbook

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