MercoPress. South Atlantic News Agency

Argentine farmers attracted by the allure of fail-safe soy

Argentina produced 46.5 m. tons of 2007-08 soybeans from a sowing area of 16.6 m. ha.

Despite the recent dip in prices soybeans keep attracting Argentine farmers who for the coming 2008/09 season are expected to dedicate a record area to the oilseed crop.

Argentina is the world's No. 3 soybean exporter and the top supplier of soy oil and meal. The amount of land planted with the crop has more than doubled in the last decade and the 2008-09 output could exceed 50 million tons for the first time. "Soy prices aren't as good as they were a month ago, but even so, growing corn and other crops is much more expensive, more vulnerable to drought and riskier," said Ricardo Baccarin, an analyst at the consulting firm Panagrícola, who forecasts a 7% increase in the sowing area to 17.8 million hectares. Earlier this year the Argentine government tried to put the brakes on soy's relentless spread by raising export taxes on the crop, and cutting the levies on corn and wheat, which are key staples in the Argentine diet and impact inflation. However after months of protests the President Cristina Fernandez de Kirchner administration was forced to scrap the sliding export tax measure after four months of farmer protests that triggered a political crisis. But persistent uncertainty about the Argentine government farming policy has added to the appeal of "fail safe" soybeans, and analysts say the oilseed's expansion will be at the expense of wheat and corn, and other farm activities which have also been loosing ground such as dairy and even beef livestock. "There's a million hectares less wheat and a lot of that's going to be used for soy," said Pablo Adreani, an analyst at the Agripac consulting firm. Others have reduced their corn planting plans to a minimum because of soaring fertilizer costs, increasing the allure of soy, which requires relatively little fertilizer. Argentina produced 46.5 million tons of 2007-08 soybeans from a sowing area of 16.6 million hectares, slightly short of the previous season's record production of 47.5 million tons when near-prefect weather boosted yields. Estimations for the planting outlook, which begins next October, could see a bumper harvest of 52 million tons, Adreani said. "(Soy) represents the smallest outlay per hectare (and) it's the safest bet because farmers know how to deal with it and it's less dependent on good climate than other crops," said Rodolfo Rossi, president of the soy association ACSOJA, who estimates the 2008-09 output at 49 million tons. The US Department of Agriculture (USDA) raised its monthly forecast for Argentine production to 49.5 million tons earlier this week from its previous outlook of 48 million tons.