Farmers fearing the unpredictable weather system may plant more soybeans, less corn to keep losses and costs down
BUENOS AIRES, Argentina (Reuters) — The El Nino weather phenomenon is expected to start dumping torrential rains on Argentina next month.
The wet weather will push farmers to plant more low-cost soybeans and less corn despite concern over lack of crop rotation in one of the world’s main food suppliers.
Argentina expects to get walloped by El Nino-related storms just as seeding gets underway in October.
About a quarter of bread basket province Buenos Aires is already under water because of record August showers, and soil may not be able to absorb the rain ahead. This is an additional headache for growers already bedeviled by stiff trade controls and one of the world’s highest inflation rates.
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“They are likely to hedge their bets this year by planting soy rather than corn, which is relatively expensive to cultivate,” said local farm economist Manuel Alvarado Ledesma.
Cheaper-to-grow soybeans have taken Argentina’s Pampas grain belt by storm over the last decade, raising concern that the lack of residual corn stalks and mulch left by other crops is robbing the soil of nutrient.
Wheat that had been recently planted has been wrecked by flooding, and conditions for harvesting in December and January might not go smoothly if forecasts of the strongest El Nino on record come true, said Anthony Deane of consultancy Weather Wise Argentina.
El Nino, marked by warmer than usual air above the eastern Pacific Ocean, tends to increase rain in Argentina while causing dry conditions over the Australia-Indonesia archipelago and Southeast Asia.
“It’s going to wreak havoc in northeastern, northwestern and central Argentina,” he said.
Deane said 40 percent of Argentina’s main grain belt is on high enough land to avoid flooding from the October through April El Nino cycle, and he expects areas that are not flooded to enjoy high production.
By eliminating the threat of drought, El Nino could be net positive for corn farmers with access to high-placed land, said Martin Fraguio, head of corn industry chamber Maizar.
“Highlands are more productive, and thus in El Nino years they more than compensate for losses in the lowlands,” Fraguio said.
“Droughts are equally bad for all areas, high and low.”
Argentine farmers are expected to plant 6.72 million acres with corn, down 20 percent from the previous crop year, the Buenos Aires Grains Exchange said last month.
Reasons for the projected cut include low world corn prices and the exploding cost of seeds and fertilizers in a country where economists estimate inflation at 27 percent.
Farmers also complain about the corn and wheat export quotas that the government uses to ensure ample domestic food supplies.
The economy ministry can raise and lower the quotas throughout the year, making crop planning difficult.
“Talking about climate conditions in a year like this, plus the uncertainty created by the export quotas, it’s like we’re playing roulette,” farmer Santiago del Solar said.
“But if we plant soy and lose, it costs us less than if we planted corn.”
Argentina’s leading opposition presidential candidate, Mauricio Macri, said he would lift the quotas. The front-runner ahead of the Oct. 25 election is Daniel Scioli, who is from the party of outgoing president Cristina Fernandez and has yet to outline his farm policy platform.
“If Scioli wins and promises an end to the export quotas, farmers will probably plant more corn than they expected to in December,” said Alfredo Paseyro, head of the Argentine Seed Venders’ Association.
“That would mitigate the expected decrease in 2015-16 corn planting area,” he said.
