South America Calling

Some Argentine Farmers See Brighter Days Ahead

While the low price outlook for grains is worrying farmers across the Americas, some Argentine farmers see their business improving over the next year, according to a survey conducted by the CREA farm group.

According to a survey of members, which includes mainly larger producers, some 63% saw the financial situation of their farm worsen compared with last year, but 49% expect the situation to improve next year.

The faith shown in the future by half of Argentine farmers is not based on an expectation that grain quotes will recover -- they have seen the same flat long-term price forecasts as the rest of us -- but a belief that the economic situation of Argentina might finally improve.

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Over the past five years, Argentine farmers have suffered a toxic mixture of heavy export taxes, capital controls, high taxes and inflation, which has significantly eaten into their margins. Low prices this year will potentially make many insolvent.

However, the expected candidates in the October presidential election have pledged to put the economy back on its axis, and many believe whoever wins will be more farm friendly, easing the burden on producers.

Despite an improvement in the outlook, most CREA members will hold off on investments until the situation becomes clearer.

According to the survey, some 61% believe now is a bad time to invest.

Argentine farmers have been stocking 2013-14 soybeans in silo bags as protection against a devaluation of the Argentine peso and inflation.

As of the end of March, when harvesting of the 2014-15 crop was just starting, CREA members held an average of 8% of the 2013-14 crop in store, it said.

Meanwhile, farmers estimate that operating capital needs will rise 8% in dollar terms for the 2015-16 season. That's a problem at a time when access to credit is limited.

(AG)

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