MercoPress. South Atlantic News Agency

Argentine wheat crop, and export surplus, lowest of 32 harvests

Fields and fields, but where is the wheat?

With the lowest wheat area in 111 years, Argentina expects a 2009/10 crop of 7.5 million tons, the worst in the last 32 seasons, which means exports, --and tax revenue--, will be ten times less than the 2007/08 crop according to the Argentine Rural Society Economics Department.

Gustavo Lopez from agriculture consultants Agritrend said that two harvests ago, 2007/08, the wheat crop was 16.3 million tons, of which Argentina exported 9.4 million tons collecting 3.5 billion US dollars. However this season the export surplus will be in the range of 1.5 million tons or 315 million US dollars, exactly ten times less.

The 2007/08 was the last harvest relatively normal: without the extreme drought from which agriculture is only recovering, and when Argentine farmers were planting 2.8 million hectares with wheat. Government interference in the price system also contributed to discourage wheat farmers and wheat sowing.

Therefore this coming crop will only have an export surplus of 1.5 million tons, the lowest since 1978 when the surplus was 1.6 million tons (out of a 1977/78 crop of 5.3 million tons). But this was not the worst Argentine harvest in the last six decades: in 1952, because of the drought and government interference, the export surplus was 65.000 tons out of a total crop of 2.1 million tons. The area planted was 4.8 million hectares but only 2.8 million were harvested.

As a consequence of the 2009/10 situation Argentina “is bound to loose positions as a reliable supplier of neighbouring Brazil, which has already signed contracts with Canada and is in a similar process with France”, said Ernesto Ambrosetti head of the Argentine Rural Society Economics Department.

“The impact will also hit the Argentine treasury since in 2007/08 it collected 770 million US dollars on wheat export taxes, and in 2010 that figure will plunge to 72 million, ten times less”, said Gustavo Lopez. As reference this is equivalent to just over 1% of the 6.8 billion US dollars the Argentine treasury will be collecting soy export taxes.

Argentine wheat farmers are discouraged because without lifting the ban on export restrictions, “prices’ distortions will continue to impact prospects and in some cases unfairly benefiting millers and exporters who take advantage of the ‘captive market’” pointed out López.

Furthermore “statistics are lagging and farmers, agents and hoarders are not sure of how many tons will be finally harvested”, concluded Lopez.