Soy boon for Argentina as war in Ukraine raises prices

LOBOS: Russia’s war on Ukraine has skyrocketed grain prices – a concern for consumers around the world, but potentially a boon for producers like Argentina, which hopes an influx of soybean “agridollars” will boost its faltering economy.

South America’s third-largest economy is the largest exporter of soybean meal and oil in the world, with only the United States and Brazil exporting more soybeans.

Soy represents almost a third of Argentina’s exports and contributed $9 billion to the state treasury in 2021.

This year, the industry expects record revenues of $23.7 billion – about $700 million more than in 2021, despite a 10 percent smaller harvest due to severe drought.

“Prospects for the producer are good… There is optimism,” said Martin Semino, who sells agricultural equipment and is president of the Rural Society of Lobos, a fertile agricultural area southwest of Buenos Aires.

The harvest season is at its peak and workers work from dawn to dusk to clear the fields before the fall rains arrive.

“Soy is the dollar, the currency of the countryside,” Semino told AFP.

In the past, the grain has been a savior for inflation-ridden Argentina.

A soybean in the 2000s is widely believed to have helped the country recover from its worst economic crisis in 2001.

In the past 40 years, the planted area of ​​soy has multiplied 14 times.

‘TAKING THE MOMENT’

Argentina is also a major producer of sunflower oil and wheat – other grains affected by the ongoing war.

After a record sunflower harvest of 3.4 million tons in 2021-2022, the acreage will increase by 17 percent this season to 2 million ha.

The country also had a record crop of wheat this season.

It is estimated that Argentina’s agro-industrial exports will reach a record $41 billion in 2022, about $3 billion more than in 2021.

“With prices close to historical records, Argentina, which is always in need of dollars, needs to seize the moment,” Tomas Rodriguez Zurro, an analyst at the Rosario Stock Exchange, told AFP.

The price hike “is temporary, it will end when the war is over,” he warned.

But some point out that Argentina could have gained an even greater advantage if input costs had not increased.

Argentina imports about 60 percent of the fertilizers needed to grow food — about 15 percent of that from Russia — but supplies are now scarce and prices are rising, meaning lower yields.

Higher fuel prices are also taking their toll, amid rising consumer inflation of about 60 percent expected for Argentina this year.

The chambers of the Oilseed Industry (Ciara) and Grain Exporters (CEC) have warned that rising input costs — as well as fuel and fertilizer shortages — have “neutralized the relative benefits” of the rise in commodity prices, or worse, the relative benefits. .

Added Semino: “Input costs have exploded with the war.”

ANGRY FARMERS

In April, farmers staged a protest in Buenos Aires to express anger at the government’s plans to tax windfall on products boosted by the war in Ukraine.

The tax, which will only be levied on those who earn more than a billion pesos (US$8.5 million) in net profits for the 2021-2022 season, would be used to cushion inflation shocks for the poor.

Argentina has a poverty rate of 37 percent.

The government has also introduced quotas for wheat and maize, of which Argentina is the world’s second largest exporter.

It has announced a so-called “wheat stabilization fund” to ensure that the price of the basic grain – and therefore bread – remains protected against strong fluctuations.

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