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Policy rollback could slash Argentina’s grain production by 60m mt: Ministry

Argentina’s potential grains production over the next decade could vary by up to 60 million mt of production, depending on the incoming government’s policies, a study from the country’s agriculture ministry has concluded.

The study looked at three possible scenarios that the new government could deploy, including one that assumes a return to policies that slowed development in the agriculture sector, implemented by Cristina Fernandez de Kirchner prior to 2015.

At the other end of the scale, the forecasts assumed a scenario where current policies remain in place and the sector invests in modern technology.

Fernandez de Kirchner is expected to assumed the role of Vice President in the incoming administration.

The study concluded that Argentina’s overall grain production would experience a decline in the coming years if the next government reinstates policies similar to those implemented before 2015.

In the least optimistic scenario, the forecast simulated policies adopted by the Fernandez de Kirchner government before 2015, and predicted grain production would reach 121.1 million mt by the 2028/29 campaign.

The scenario anticpated soybean production of 61.9 million mt, while corn production would crash to 28.9 million mt – just over half the current crop’s size.

A more optimistic scenario, based on current policies and investment in technology, showed that Argentina’s overall grain production could reach 189.8 million mt by 2028/29 crop cycle.

In this scenario, corn production will surge to 73.2 million mt, surpassing soybean production which is forecast to reach 70.8 million mt with wheat at 25.9 million mt.

Other grains will account for the remainder.

A third scenario foresees grain production of 168 million mt by 2028/29 based on a political, technological and economic framework inherited from the current government but without the impact of additional technological improvements.

Under this scenario, soybean production will reach 77.9 million mt, corn 50.6 million mt and wheat at 22.4 million mt.

President Mauricio Macri supercharged the country’s grains sector early in his presidency, when he reduced export duties on soybeans and eliminated duties for corn and wheat soon after he took office in December 2015.

Macri also eliminated export restrictions in wheat and corn which led to an expansion in the planted area of both grains since 2016.

However, by September 2018 with the country’s finances in disarray, the government was forces to reinstate export duties of 4 pesos per exported US dollar on all grains.

According to the ministry’s latest forecasts, Argentina’s farmers are forecast to produce a total of 123.9 million mt of wheat, soybean and corn during the 2019/20 crop cycle, down almost 8 million mt compared with the previous cycle.

President-elect Alberto Fernandez, of centre-left coalition Frente de Todos will take office on December 10, and has already said that there is no room to reduce the tax burden on the agriculture sector due to the fiscal deficit.

Many market observers believe that the incoming administration will raise export duties in a move that, analysts believe, will see farmers invest in less technology to boost crops.

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