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ECIN
Senior Advisor

From Agro -Blog = Argentina Producers .

 

Argentine producers cease to grow

I was in Argentina last week by Brazil Soybean project, which despite its name has acquired an international character, and I could travel more than 1,500 kilometers and talk to some producers and institutions. What I saw was the suffering of Argentines over a crop full of uncertainty, and what is worse, with indications that some producers leave farming areas due to losses followed by two seasons.

The previous season had significant losses for both soybeans as for corn. In soybean there was a 22.6% drop in production and, in corn, 31.16%. Considering the breakdown of the previous crop and 60% of the areas are leased, were recorded losses between $ 200 to $ 300 per hectare, so Argentine producers are at their limit.

To make matters worse, the country has embittered inflation of 25%, 26% and 29% in the last three years, which directly impacts on production costs, since 40% of the cost of the producer (freight and agricultural operations) are paid in Argentine Pesos . And with the prospect of another year of losses, reaching 50% in provinces to the north, we can say that there are producers who no longer have to continue the activity. Besides inflation, the tax burden is too high, impacting farmers' income by 40% (retentions of 35% on the value of soybeans and 5% in income taxes). 

In Brazil the producers know this story very well, so much so that some regions in the past 10 years have lost the same reasons, 50% of producers who kept her activity. In Fields Julius-MT, my county, for example, were 166 producers in 2003 and today we are only 47, and half of these do not reside in the county, and as a result much of the area is absorbed by larger groups.

In the case of Argentina, which until November predicted a record crop, climate saw his greatest enemy, entering December with excess rain and flooding in various regions. As a result of the 19.7 million hectares potential 2.2% were not planted and who planted 6.7% were committed to the flooding, leaving an estimated area of 18 million hectares to be harvested. Prolonged rains caused late planting stay in 28% of regions. In some, the delay was 10 to 36 days depending on the region, which is compromising productivity. Data from research institutes in Argentina show falls around 30 kg per day late or 30 days late planting in loss of 15 sacks.

Not enough to flood areas, then came the drought in some regions experiencing up to 60 days without rain. In Santa Fe, a province that borders south to Buenos Aires, some areas have seen the last rains on December 15, which translates into longer breaks 30% to 40% in productivity. Importantly, 60% of Argentine areas are leased and the lease amount is around 30 bushels of soybeans per hectare, unlike what we have in Brazil where leases have a maximum of 15 bags per hectare.

Due to all these problems crop Argentina before expected 55 million tonnes, not expected to exceed 48 million. Already we can even estimate an average productivity that should not be much above 2.6 tonnes per hectare. Producers make promises and pray for the rains come and the damage is not larger. Until now, the provinces of Tucumán and Santiago were the most affected and should be the ones that most producers will lose ultimately with crop loss of 50%, direct taxes that reach 40% of production and a lease that reaches 60% of costs total inflation of 29%, it becomes impossible to continue production.

This entry was posted on Soybean and marked Aprosoja , Julio Campos , Glauber Silveira , MT , Argentine producers by Glauber Silveira .

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8 Replies
sw363535
Honored Advisor

Re: From Agro -Blog = Argentina Producers .

ECin,

 

Do you get the feeling that Brazil and Arg. are the China of commodity production------------------- the cheap bulk producer with the exploitable work force.

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sw363535
Honored Advisor

Re: From Agro -Blog = Argentina Producers .

Speaking of exploitation,  There is a pie chart on world soybean production comparing 1994 with 2012.  It is found on a daily FC Stone publication that came out this morning.  I wish i could exploit it------------- but honorably I will just say,  if you get it -----take a look.

 

 

 

 

 

your right -------------- I would if I could.

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jput
Senior Contributor

Re: From Agro -Blog = Argentina Producers .

IMO,  what you have in Arg.  is a worse system than China's.    And the Chicom socialist-communist system is pretty dang corrupt.   Arg.  has some very good farmers,  who know what they're doing.   Their govt. is a constant problem and this time the weather smacked them, piling more misery on.

 

I agree that Brazil,  Arg.  and also China exploit the low cost labor angle.   But we've only had a couple years of grain farmer true prosperity here.   Our price bubble will burst.  

ECIN
Senior Advisor

Re: From Agro -Blog = Argentina Producers .

Sw and jp- i agree 100% with you 2 , these government heads like there job's = power , there worse enemy is social unrest = price of food OR no food , they like the taste of Pork - Chicken and Beef over rice and fish heads ( as Faust would say ) . They can buy a nice house or car or what ever , but they have to eat , and what better way to controll there needs than to pore a lot of money into a country for there crop needs - such as rail - roads and ports . Then throw in the labor deal , What S.A has is land to rise it where as in China the land is what they have to live on and there pop. is  growing every day .

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roarintiger1
Honored Advisor

Re: From Agro -Blog = Argentina Producers .

It won't matter how many acres these SA countries bring into production......if there is nobody there to farm it.     There certainly aren't gonna be many if no one can make money doing it.

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jput
Senior Contributor

Re: From Agro -Blog = Argentina Producers .

A assessment of the 3 nations:

 

 

Arg. = good,  knowledgable farmers skilled at growing decent to excellent yields who have a nasty govt. that abuses them and longshoremen unions who strike for the slightest reason.    Okay,  but not great roads and rail.  Govt. is the enemy of these farmers but farmers lack the numbers to overcome those sucking at the socialist govt. nipples (USA is headed to that status right now).  The EU has bought Arg.  grains for decades and the EU hates our USA guts.

 

Brazil = also good, knowledgable farmers but roads, rails and river movement sucks big time.    Talk of improving infrastructure for years but nothing happens.   Govt. is corrupt,  just a slightly different version of Arg.  corruption.    China will buy their beans as much as possible,  screw USA if they can avoid buying from us.   But they'll buy from USA as a marriage of convenience until (when) Brazil gets their transportation act together.   IMO,  Brazil farmers view China as a customer but no way trust China.

 

China =  ag. there is all screwed up.   Many small plot acres.    The communist leaders need to keep a lot of people busy so hand work is preferred over efficient machinery run over large acres.    Yields are low because there's little ag. knowledge.   They're adapting to gmo varieties which will make weed control better but they're 100 years behind in production practices.   But......they'll be catching up on a fast pace.  Govt. is the problem.    And their soils haven't been treated well under communism,  just like the Ukraine soils were abused for years.   Yeah,  there's still a lot of bushels produced in China but there's a lot of mouths to feed.   Hungry people overthrow govts. and the commie leaders know that.

 

 

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sw363535
Honored Advisor

Re: From Agro -Blog = Argentina Producers .

jput--------- thanks---------------- the usa is there. 

 

 

The comment about "farmers won't produce without a profit". -------------- If we think we are better then relive the 1960-1990s.

 

The trick for government is to keep the profit margins low or around zero and entice planting/production.   Look back at that era in the US and see what a Sofausticated government can accomplish.  We certainly gave Argentina a blue print.

 

We are in an amazing time in Agriculture----------------- a died and gone to ---------------- time.   We owe this all to two things that occur seldom and coincide almost never.

 

1-   World around droughts------ strategically droping the supply of commodities over a period of several years.

 

2-  An irrationally ignorant environmental movement-------------- God bless em---------------- if your a grain farmer.

 

Coupled with  A growing high world population------------------------ temporarily.  And the "awsome"(hate that word) ability of mankind to generate corrupt governance.

 

SOOOOOOO----You got an ag economy that has never been seen in history.  It is a gift we should not take for granted and it will not last long in the scope of history.

 

 

jput
Senior Contributor

Re: From Agro -Blog = Argentina Producers .

I agree that the US grain bubble isn't going to last.   Of course all the wizards of smart parrot that we will have over 162 bu corn on record planted acres in 2013.     Really?    Mother Nature wasn't asked.    Subsoil moisture is in deficit,  will take years to rebuild.   The CME traders are brain dead if they're drinking the kool aid.

 

What passes for common knowledge isn't common sense.    USA grain farmers took a long lasting kick in the nads with the Jimmy Carter grain embargo.    Gave these third world nations a jump start.   Instead of running brahma-zebu cattle on cerado acres,  hey there Juan Valdez,  you too can be a grain farmer.   Carter screwed it all up and we're still living that Carter wet dream nightmare.  

 

Give the Arg. and Brazil farmers their due at figuring out the production angle.    Meanwhile,  the US Mississippi River barge system is undersized,  neglected and our corrupt govt. is throwing farmers to the enviro-zealot wolves.

 

 

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