Nov 01, 2021
Argentina to Plant Lowest Soybean Acreage in 15 Years
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
As spring planting gets underway in Argentina, farmers will be planting the fewest soybean hectares in 15 years. While the soybean acreage continues to increase in Brazil, the soybean acreage has been decreasing in Argentina in recent years.
The declining soybean acreage in Argentina can be attributed to several factors including:
- An export tax of 33% on soybeans and 31% on soybean meal and soybean oil which makes soybeans less profitable than corn, which has an export tax of 12%.
- Worse results and lower margins for soybeans in recent years compared to corn.
- Under adverse conditions, soybean yields are less stable than corn.
- Under good conditions, soybean yields have stagnated compared to corn.
- Less genetic advances for soybeans compared to corn because seed companies have difficulty collecting royalties on new soybean varieties. Weak seed laws allow farmers to replant/sell their seed, which they cannot do with hybrid corn.
- Political uncertainty - Argentine farmers never know what measures the government may take that could impact commodity exports, which in turn could impact their margins.
According to the President of the Argentina Soybean Association (Acsoja), the government and its tax policies and market interference has "killed the golden goose" which in Argentina is soybeans.
Export taxes for soybeans started under the administration of President Nestor Kirchner (2003-2007) and continued under President Cristina Fernandez Kircher (2007-2015). President Maurico Macri (2015-2019) promised to lower the export taxes and to stop interfering in the export market, but he was overcome by the country's financial crisis and he could not follow through on his promises. In fact, the export taxes on agricultural commodities is a major source of revenue for the government.
The current administration of President Alberto Fernandez and Vice President Cristina Fernandez Kirchner has increased export taxes and resumed interference in the export markets to hold down domestic food inflation, which is running at 50% or higher.
Forcing products to stay within the country to hold down prices may be good for consumers, but it is devastating for the agricultural sector. As a result, farmers in Argentina have turned very cautious and have moved to more corn production where margins are more secure.
As of late last week, the 2021/22 corn in Argentina was 27.6% planted and the soybeans were 4.6% planted according to the Buenos Aires Grain Exchange. The Grain Exchange expects farmers in Argentina to plant 7.1 million hectares of corn (17.5 million acres) and 16.5 million hectares of soybeans (40.7 million acres).