I have been involved many times, through my consultancy role, with local and foreign investors seeking advice over specific land purchases and farming opportunities in our region.
Experience suggests that when you buy cattle land at around US$1,500/ha (£975/ha) to convert to arable land, 10% returns are possible. The same sorts of returns are available on “development” land in the north. Despite the outward reputation of Argentina having less than perfect politics and finances – a common feature everywhere now it seems – its agricultural industry is impressive. Unbelievably low production costs – labour and machinery at US$100/ha (£65/ha) on arable units – simple min-till systems using GM technology and equipment produces the results at a fraction of the cost in western countries. These factors have contributed to Argentina’s ability to double total grain production in the past 15 years. Grain production is now close to 100m tonnes, despite government policy to restrict commodity prices to up to 35% less than global prices using taxation.
Beef prices were below US$1/kg liveweight for many years due to government attempts to control the market and keep prices low for too long, but have doubled in the past six months. The grasslands of the north represent good value at US$700-US$2000/ha (£455-1300/ha) and they are still being converted into arable land for agricultural use to add value and increase returns. This practice has been widespread in the Humid Pampas region over the past 15 years and the practice is spreading further north. Having said that, with growth rates from grazing of around 750g/day, with no supplementary feeding and up to 200kg/ha from natural grassland, large-scale beef finishing margins are interesting.
Argentina is a fascinating country where potential investors can learn a great deal about low-cost arable farming production in a commercially successful environment for farmland investment, set in an enjoyable place.