Argentina Domestic Commerce Secretary, Guillermo Moreno has given mills and exporters until Friday to normalize the wheat market which has been under stress with bread prices doubling in the last month, and farmers’ complaining about the worst harvest in decades because of government policies.
Argentina which is one of the world’s leading exporters has seen its 2012/13 wheat production drop to below nine million tons compared to the fourteen million tons of the previous harvest.
“If by Friday the market is not normalized, the Argentine government will apply the supply and anti-hoarding law which enables confiscation of the grain and the sale of the produce to mills to ensure flour to bakeries” said the aggressive Domestic market secretary.
Argentine Agriculture Minister Norberto Yahuar announced on Tuesday that the wheat market has a surplus that hasn’t been sent to market yet. “We are waiting for the exporters to supply the grain for the local industry. If they don’t do it, the national government will carry out measures” warned Yahuar.
However in a press release, the Argentine Wheat Association (Argentrigo) criticized the policies of the federal government for the grain market “over the last seven years.” The association said that the “interference in the commercial sector” led to “a limited stock.”
“We should be talking about how to expand our industry to new markets but now we have to administer the shortage of wheat. The limits on exports and the taxes applied by the federal government are the cause of the current situation,” Argentrigo said.
Argentina’s low wheat production will probably lead to the need to import it since the nine million tons produced won’t be enough until the end of the year when the next harvest starts. But the situation could improve next year, said the wheat farmers.
According to a report by the Agriculture Ministry, the Argentine harvest target for this year is close to four million hectares, which would mean a 26.5% increase compared to 2012. The federal government has also announced additional measures to promote production, such as the full reimbursement of wheat export duties.
“We harvested 9 million tons of wheat and Argentina consumes 5.5 million tons; of those nine million tons over a million have been exported which means there are 7.5 million tons available”, said Minister Yahuar, “and this means flour prices must come down”.
He added “we normalize the situation with good manners or the government will adopt all necessary measures to make wheat reappear, and ensure there is flour in the table of every Argentine”, warned Yahuar.
Buenos Aires Bakeries association called on farmers and mills who have wheat to sell it “at a reasonable price for the domestic market so prices can normalize”, adding that if this does not happen they will formally request the implementation of the supply and hoarding bill “to ensure mills sell that percentage of flour at the differential price agreed”.