Dec 09, 2014
Argentine Farmers may be Denied Credit due to Lack of Soy Sales
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
In their continuing effort to get farmers in Argentina to sell their remaining soybeans from the 2013/14 growing season, the Argentine federal government has now indicated that farmers will be prohibited from obtaining loans from the National Bank or maybe even have their accounts closed at the bank if they cannot prove that they have sold all of their soybean production from last year. The potential restrictions will take effect on January 1, 2015.
It is hard to know exactly how many soybeans from the 2013/14 growing season have not been sold, but the estimate is approximately 14 million tons or about 25% of last year's production has yet to be marketed.
There will probably be some impact from this ultimatum, but the extent of the impact on increased sales remains to be seen. Farmers have been slowly selling their soybeans as needed to pay bills and living expenses. Soybean sales will probably now accelerate somewhat, but if the government starts closing bank accounts, who knows what will happen.
More than just forcing the sale of old crop soybeans, I think the Argentine government is setting the stage for the 2014/15 soybean harvest. With these new measures in place, the government will be in a stronger position to force farmers to sell their 2014/15 grain production at a faster pace than they normally would.
It continues to be a sad state of affairs in Argentina. The agricultural sector instead of being championed as a leader in the Argentine economy, is being vilified as greedy hoarders of grain causing the current liquidity problems faced by the federal government due to a lack of foreign currency.