BUENOS AIRES, Argentina (Reuters) — The lack of a rail system to haul grain from Argentina’s next farm frontier in the far north costs the country millions of tonnes of soybean, corn and wheat production every year, prodding the government to jump-start infrastructure projects.
Earlier this month, Argentina awarded contracts to lay 416 kilo-metres of train track in the northern provinces of Jujuy and Salta as part of its “Plan Belgrano.”
It was the most recent of what could be many steps toward revitalizing transportation in one of the country’s poorest areas.
President Mauricio Macri was elected in 2015, promising to reinvigorate an economy weighed down by currency controls and the previous government’s longstanding feud with the key agricultural sector, which stunted output from the world’s top exporter of soybean meal.
Areas most neglected were northern provinces where trucks rumble slowly over dirt roads.
“We’re isolated,” said Arnaldo Iriarte, a farmer in the Chaco town of Presidente Roque Saenz Peña, 820 km from grains port hub Rosario.
Macri plans to build roads and trains in the north, but the wave of foreign investment he promised has been slow to arrive while spending has been limited by a yawning fiscal deficit.
Northern Argentina produced 17.1 million tonnes of grain last season on 14.8 million acres of farmland, and is one of few producing areas with more room to expand.
A train system could increase planted area to close to 25 million acres, said Julio Calzada, an analyst at the Rosario grains exchange.
“The cost (of trucking) is very high for farmers in this area, on top of the fact that yields are lower than they are in the central farm belt,” Calzada said.
Some 15 percent of Argentina’s overall soybean, wheat and corn grains output, estimated at about 100 million tonnes last season, comes from northern areas, according to the exchange.
Trucking food from northern Argentina to Rosario, located along the banks of the Parana River in the eastern province of Santa Fe, costs 64 cents per tonne per km versus 30 cents by train, according to the exchange.
A train system in Salta could increase farmland by 30 percent to 3.2 million acres, said Lucas Elizalde, provincial head of the Argentine Rural Society, a leading farm group.
“Our constant complaint is the lack of investment in a rail system to help make us logistically competitive,” he said.