My soya bean harvest has finished for the 2010-11 crop and the predominant feature was the variation in yields. First soya beans ranged from 1.7 to 3.3t/ha, with some second soya beans, planted as a second crop after wheat in December, yielding just 0.8t/ha because they suffered an early frost in April. Many early flowers did not progress to full pods, which could explain this variability.
Maize crops, meanwhile, failed to reach an average yield of 10t/ha, although some yields were higher than expected, especially the later planted crops helped by fertile soils and the rain in January.
Now we are starting to plan for a new crop year, full of uncertainties. I will be planting soya in October and I am wrestling with how best to tackle fluctuating commodity prices, market interference and cost of production in Argentina.
Currently, we have rapid inflation in farm costs which are priced in US dollars. The costs of seed, fertiliser, sprays and other products are soaring, which will reduce the performance of our 2011-12 crop compared with this season, assuming we still have the same yields and price. Unless there is an increase in grain prices, which seems unlikely, continued high yields are required to maintain attractive margins.
In addition, my sales are calculated and agreed in US dollars, but converted and paid in pesos. In an election year, we are unlikely to see any major improvements from a weakening peso against the dollar. Argentina is earning US dollars from abroad given the high prices of commodities and export retentions.
Under this framework, the government finds it easy to keep control of the dollar rate. Therefore, it would be unreasonable to expect devaluation to offset a poor crop yield or price drops this year. The prospects are that the high export retention tax of soya beans (35%) will continue after the election for the 2012 harvest.