Farmers in the Humid Pampa region often ask me about where the best places are to enlarge their existing businesses. We usually discuss the two options I have done myself: Either continue to rent farms in the same region, or buy land far away in areas not known for their arable farming.

Both choices are valid depending not only on the economics of the decision, but also the capacity to manage the family and workers who have to pursue the venture at distance – perhaps even thousands of miles away.

To rent agricultural land in the Pampas requires considerable capital of US$610/ha (£390/ha) – $460/ha (£293/ha) for rent and $150/ha (£96/ha) for direct costs. For a typical soyabean yield of 3.6 t/ha, a margin of $133/ha (£85/ha) might be typical – 22% returns on working capital – but rental contracts are very short, usually for one year only.

To buy land in the northern provinces of Salta andSantiago del Estero, which is already developed for agriculture, costs from $1900-2200/ha (£1213-£1404/ha). Incomes range from $150/ha – $300/ha (£96-£192/ha) depending on factors in the area, such as rainfall, soils, distance from markets. This option can give 8%-16% returns on total capital invested, plus land value growth. Over the last decade, these lands have typically achieved between 15% to 20% annual growth.

Wheat prices have been soaring in the US and Europe, but in Argentina we have not moved much. Since our December 2009 harvest, prices have risen $15/t (£9.60/t) to around $170/t (£109/t) now, reduced due to the export retention policy our government has had in place for years. However, with serious wet weather reducing planting, the December 2010 harvest may be different. We expect to start soya planting in October and have currently planted 500ha of wheat.