Argentine farmers, anxious about an increasingly murky political outlook and economic turmoil, are turning toward soy over more expensive corn to cut costs, a shift that could impact next season’s harvest in one of the world’s top grain exporters.
Farmers said a volatile economic situation in Argentina and the likelihood of a new administration at the end of the year, after President Mauricio Macri was hammered in primary elections, meant soybeans looked a less risky bet than corn.
Corn costs around US$ 500 a hectare to produce, around 70% more than soy, local consultants say, because it requires more investment in fertilizers and new seeds each season.
Dino Garimanno, a farmer in the central Argentine town of Laboulaye, said he was considering replacing his corn with a cheaper option. “It is a little scary to bury all those dollars in the ground,” he said.
The trend could weigh on Argentina’s 2019/20 corn harvest and bolster the output of soy, analysts said. The country - now at the start of the planting season - is the world’s top exporter of processed soy and the number three for corn exports, behind Brazil and the United States.
Fears over the future government’s policy direction have increased since business-friendly Macri was soundly beaten in the Aug. 11 primary by Peronist rival Alberto Fernandez, rocking markets. Fernandez is running on a ticket with populist ex-President Cristina Fernandez de Kirchner.
Fernandez de Kirchner is highly unpopular with the country’s farmers after bringing in export curbs and taxes on overseas farm sales during her 2007-2015 presidency. The general election is on Oct. 27.
“The (primary) result has generated uncertainty and producers will be changing portfolios to incorporate more lower cost crops,” Pablo Adreani, Buenos Aires-based head of AgriPac consultancy, said in an interview.
Gustavo López, director of consultancy Agritrend, estimated farmers would likely cut the area intended for corn this season by 200,000 hectares, to 6 million hectares. Soybeans would take that area to reach 17.7 million hectares.