Twenty percent of GDP in Argentina is agriculture-related, making it an important country for agriculture production due its high yields.
Argentina is the world’s largest exporter of sunflower oil, a leading exporter of soybean oil and among the top five exporters of soybeans and corn. More than a third of Argentina’s exports are in agri products, which earned them $25 billion in 2010/2011.
Export oportunities is a key driver for agricultural production for 1014/2015, particulary for grains, rice and sugar. However a key risk is the county’s rising food inflation, which could force the government to try and stem exports as has been done to beef exports in the past.
The government is taking positive steps to change grain seed laws to increase the biofuel blending limit, which could increase production in the medium term.
It could help foster a good relationship with the farmers and capitalize on its strong production potential.
Beef consumption is expected to decline as consumers switch to poultry. It has unintended consequences.
Farmers will build stocks on the back of high prices and Argentina could return to being one of the world’s largest beef exporters over the medium term.
The long-term soybean forecasts should be revised as the government passes new seed laws to encourage farmers to use genetically modified GM seeds.
Only 35% use it now and that could change to 80% shortly. It would cut production costs while allowing farmers to earn more revenue from their output.
It could mean that Argentina could surpass Brazil and become the world’s second largest soybean exporter. At the moment they are in third place.
A continued rebound in corn is expected as Buenos Aires Grains Exchange already saw a 4% area increase in corn planted for the 2011 season. Argentina is the world’s second largest corn exporter.