Argentina's strong soybean and grain harvest this year is a source of optimism in the face of a global grain shortage brought on by the war in Ukraine – as well as a supplier of an injection of "agro-dollars" into the country's battered economy.
In May, the harvest enters its most feverish stage. In Lobos, 100 kilometres southwest of the capital, harvesters work from sunrise to sunset to "lift" the soybeans before the southern autumn rains arrive.
The outlook for producers is good and so are international prices. There is enthusiasm," says Martín Semino, who sells agricultural machinery services and chairs the Rural Society of Lobos, a fertile agricultural area where corn is also grown.
Argentina is one of the world's largest agricultural producers and a leading exporter of soybean oil and flour. The oilseed has been its star product since a GM variant was developed in the mid-1990s.
In the last 40 years, national production has increased 14-fold, reaching a record 61 million tonnes in the 2014-2015 season. In the first decade of the 2000s, at the height of the commodities boom, in 2001, agriculture helped the country to recover from a severe economic crisis.
The omnipresence of this "green gold" is total. "Soy is the dollar, the currency of the countryside," Semino observes.
Services and land leases are agreed in quintals of soya, which are stored in huge silo-bags in open fields as if they were gigantic piggy banks.
The other side
For this agricultural cycle, almost 39 million hectares have been sown – 16 million with soy. Around 127 million tonnes is expected to be produced, almost two percent less than last year due to the weather conditions. The difference will be more than compensated for by prices, which are near their highest levels.
Farmers in Argentina have already harvested wheat and sunflower – both produced record yields – and are currently harvesting soybean and maize. They will start the new wheat sowing season in mid-May.
It is estimated that agro-industrial exports could reach a record US$41 billion this year, some US$3 billion more than in 2021.
But in the face of an auspicious international market, "the only problem is that because of the war, prices of inputs [consumables] have shot up," explains Semino.
After dodging a drought that depressed yields, producers are facing soaring fertiliser prices, a shortage of diesel in the local market and a backdrop of inflation that is projected to rise by more than 60 percent this year.
Rising oil prices due to the war in Ukraine have boosted Argentina's oil exports and refineries have reduced diesel supplies, causing a bottleneck at the height of the harvest.
"A combine harvester needs between 600 and 1,000 litres a day and we barely have enough for the trucks," says Semino, explaining that many buy the fuel on the black market.
Argentina imports 60 percent of the fertilisers it consumes and 15 percent comes from Russia.
"Nothing should be sown without adding fertilisers, but prices are sky-high," he said.
Soybeans require little fertiliser. To replenish the soil's nutrients, its cultivation should be alternated with cereals, such as wheat or maize.
But with the high price of fertilisers, "the necessary rotation is truncated because the numbers don't work out," explains Semino.
Sunflower oil boom?
The complex international context could be an opportunity for Argentina to make a breakthrough in the sunflower oil market, which is led by Russia and Ukraine.
The cost equation is good – those crops require little fertilisation and export duties are at seven percent, compared to 33 percent for soybean oil.
After a record harvest (3.4 million tonnes) the amount of land planted with sunflowers is projected to reach two million hectares – an increase of 17 percent over the previous cycle.
"With prices near record highs, Argentina must seize the moment," says Tomás Rodríguez Zurro, an economic analyst at the Rosario Grain Exchange.
The price rise "is temporary and will end when the war is over," he said, although its effects in Argentina will be more far-reaching.
The fertilisation deficit "will cause a drop in yields and a reduction in the area sown to wheat after the record production of 22.1 million tonnes, and will encourage the sowing of soy," he estimates.
Soybean production is expected to fall 10 percent this campaign, a result of drought and the high temperatures in January, and will reach 41 million tonnes. In terms of value, however, a new record is expected.
The soy industry will export US$23.7 billion worth of produce in 2022, some US$700 million more than in 2021, Rodríguez Zurro forecasts.
by Sonia Avalos, AFP