South America Calling

Argentine farmers are hopeful that a change in administration will lead to easing restrictions on grain exports and reducing export taxes.

The change would obviously be beneficial to producers, who currently see a portion of revenues eaten up by taxes, but what would it mean in terms of production? It would also contribute to a significant jump in grain production over the next decade, according to research presented by Gustavo Lopez of Agritrend, a local farm consultancy.

Speaking at a seminar in Buenos Aires, Lopez explained that if current policies were maintained, Argentina could expect a continuing decline in yields and an incremental growth in production from 107 million metric tons (mmt) in 2014-15 to around 115 mmt in 2024-25.

If, however, Argentina lifts restrictions and eases taxes, it could see yields rise 10% and production top 140 mmt, Lopez forecast.

Over the last 10 years, the policy of retentions and taxation has taken $97 billion out of the Argentine economy, Lopez estimated.

Key to growth would be the return of rotations with corn and wheat, which improve fertility and offer opportunities for double cropping.

Most important is reform of the policy whereby corn and wheat are taxed at 20% and 23% respectively and exports restricted through license. But pressure on farms from other taxes, notably provincial and municipal, has grown in recent years.

There are issues beyond government intervention and tax policy that must be resolved.

Argentina has not invested significantly in its infrastructure over the last 20 years, which means that essentially the same roads and permanent storage capacity that dealt with a 60 mmt crop is dealing with a 107 mmt crop, according to Gustavo Oliverio of Fundacion Producir, a local sustainable farm production group that commissioned the research.

The country also has to work harder at promoting value added products and, concurrently, re-establish an international farm trade policy, they said.

Lopez estimated that soybean area would remain the same over the next 10 years at around 57 million acres, while corn area could grow to 15 million acres.

Alastair Stewart can be reached at astewartbrazil@gmail.com

(ES)

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