MercoPress. South Atlantic News Agency

Argentina’s 2008/09 crop exports forecasted to drop 56%

Argentina’s cereals and oil seeds exports are forecasted to drop to 13.8 billion US dollars in this 2008/09 crop which means 56% less compared to the 31.9 billion of the 2007/08 crop according to a paper from the Argentine Agrarian Federation, FAA.

“This means we are back to 2001 levels” said Luis Contigiani and Sebastian Muñoz who researched and wrote the paper. “This in practical terms means that (grain and oil seeds) exports income this season will be totalling 18 billion US dollars less that the previous year and the Argentine treasury will loose five billion US dollars in non collected export taxes”, said Pablo Orsolini, FAA vice-president.

“This is evidence that the current agricultural policy of this government (President Cristina Fernandez de Kirchner administration) together with the drought and the international crisis are devastating” added Orsolini.

According to the paper, the sector which will most suffer is the soy beans complex which is Argentina’s main source of export revenue. In the previous season this sector (soy beans, oil and flour) represented exports valued 22 billion US dollars. However this year the sum will fall to 10.6 billion US dollars. This will have an impact on Argentine finances points out Ricardo Negri who is a tax expert

“The Argentine budget was elaborated thinking in 22 billion US dollars in soy beans revenue but they will be half that amount, and this not only has an impact on export duties but also in VAT, taxes on checks, income tax, etc.” underlined Negri.

“This is the perfect storm for farmers: less crops, lower prices, increase in costs; but the government will also pay the price and this will be particularly evident in the second half of the year”, added Negri.

The paper from Contigiani and Muñoz details the fall crop volumes: in 2008/09 the volume of soy production dropped eleven million tons; 8 million tons less of wheat; 9 million tons less of corn and 2 million tons less of sunflower, which totals a drop of 30 million tons. “According to government and private estimates from the 97 million tons of last season, we’ll drop to 66/67 million tons in 2008/09”.

Contigiani and Muñoz point out that the fall in revenue and in crop volume can be attributed to several factors: the farmers conflict; deficient government policy; lack of dialogue; voracious fiscal policy; climate adversities; drop in international prices and lack of a reply from the government to farmers hit by the drought.

Apparently with production costs soaring farmers who rent land or possess their own land have negative equations which range between 100 and 200 US dollars per hectare.

In this context the FAA requests the Argentine government to lessen the fiscal burden, emergency assistance for farmers hit by the drought and a new land rent bill which gives more stability to the market and discourages the dominion of crop land in the hands of planting pools and investment funds.

Members of FAA are mainly small, medium size farmers who own their land.