Farmer Focus: Crop margins squeezed in Argentina

Despite the huge visitor turnout and the large array of agricultural technology on show at Argentina’s equivalent to the Cereals event, the mood of Argentine farmers was less positive.

Seeing the impressive technology at the ExpoAgro 2014 show last weekend contrasted with the uncertain situation many farmers currently find themselves in.

The outlook of farmers largely depends on what farming activity they are involved in, such as arable or cattle production. While the agricultural sector still maintains high international prices, dairy farmers are living through a perfect storm following the devaluation of the currency.

About 60-70% of dairy costs depend on the dollar valuation, which can increase the overall cost of production. This high inflation, and the fact that they get paid 45 days after they deliver their milk, is putting much strain on their cashflow.

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In the arable sector, the heavy rains in February came as a relief for many growers, but they were insufficient to change the general discontent among growers. Like their dairy colleagues, they face rising costs and an increasing tax burden.

So, uncertainty remains the dominant feature for all farmers and this year there is the extra edge of the high cost of financing and not knowing who is going to absorb this. Rising bank loan rates for future cropping campaigns threaten to remove the already eroding profit margins of traditional crops like soya bean and maize.

The prevailing attitude is to stop and wait to see what happens, at least until the soya bean harvest, which is starting in the next fortnight. The agricultural year is turning out to be good in terms of yields, but this is in the context of a poor financial year.

Finance, tax burdens, rising costs and the lack of growth in logistics are some of the factors that are dampening down the expectations and are not positive for growth.

Federico Rolle farms 2,250ha of rented arable land in the Pampa area of Argentina. He grows soya beans, sorghum, maize and wheat using no-till techniques and GM crops. He has a part-time role helping Brown & Co in the region.