MercoPress. South Atlantic News Agency

Argentine farmers look for profitable alternative crops

Argentine farmers are finding other crops which enable them to avoid the hyper sensitive wheat which has been one of the main clash areas with the administration of President Cristina Fernandez de Kirchner.

Although soybeans keep “advancing” and has become a kind of “invasive” crop, Argentine farmers have also turned to barley, much in demand for breweries, and the oil seed colza ( cousin of rapeseed), which is Europe is much used for bio-fuel production.

Barley and colza have attracted Argentine farmers because they pay less export tax than wheat (23%), in the range of 20 to 10%; bread in Argentina is made out of wheat and from an agronomic point of view they can be harvested before wheat thus giving more time for summer crops such as soybeans.

According to private farm consultants Agritrend the barley area jumped from 340.000 hectares in 2006/07 to 650.000 in 2008/09. Farmers sign contracts with brewers who advance some of the cost and prices are linked to wheat (90%). Barley is also more profitable than wheat in similar conditions, according to consultant Guillermo Cavalleri from Ceres Tolva. “Besides the barley/soy combine can almost double the advantages of the wheat/soy combine”.

As to colza the area planted expanded from 10.000 hectares in 2005/06 to 85.000 this last harvest. Furthermore the price per ton which reached 400 US dollars then dropped to 250 but now is back at 330 US dollars. Last year 30/40% was exported as seed and the rest was sold for animal feed.

Argentine farmers are involved in a two year struggle with government over cereal and oil-seed export taxes, which when international commodity prices were booming, could be supported as a levy on windfall earnings. However this is no longer the case and the policy has completely distorted farmers’ finances and decision making.

Many have moved out of wheat and beef livestock, mostly for soybeans, which means that Argentina, once the world’s bread basket may be forced to import wheat and beef next year.