Argentine farmers changing from wheat to barley to avoid export taxes
2012-07-23 13:41:20
Argentine farmers are planning to boost barley planting by 17% this year at the expense of wheat, which will shrink to the second-lowest in a century, the Buenos Aires Cereals Exchange said this week. Barley isn’t part of President Cristina Fernandez export restrictions and according to Buenos Aires financial media there are indications the government is considering increasing taxes on grain exports.
Breweries such as Heineken and Anheuser-Busch InBev NV (ABI), the maker of Budweiser, stand to gain as Argentina lowers one of their main costs, Raul Maestre, the treasurer of Argentina’s wheat growers association said on Thursday. Growers are also attracted to barley as rising corn prices are causing pig and chicken farmers in China to switch to barley as feed, he said.
Barley and wheat are competing winter crops that are sown in July and August and harvested in December, according to Buenos Aires-based trader J.J. Hinrichsen. Farmers traditionally opted to grow wheat instead of barley because of its higher value in export markets, Daniel Miro from agro-industry consultants Novitas said.
The value of domestic wheat in Argentina has slumped below 200 dollars a metric ton, compared with 210 a ton for feed barley, Maestre said. Wheat futures in the Chicago Mercantile Exchange have surged 49% since mid-June because of the US drought and have reached 345 dollars a ton.
Barley, which doesn’t trade on the CME, fetches between 340 and 350 for high-quality cereal bought by brewers overseas and between 300 and 320 for animal feed, Miro said.
Animal feed costs are surging as crop-damaging drought in the US Midwest sparked a rally of more than 50% in corn prices during the past month. China’s animal feed importers are lowering their barley quality standards to make up a global grain shortage, Miro said. Saudi Arabia is the biggest importer of Argentine barley because the cereal is preferred as an animal feed to corn, according to Argentine exporters
Farmers will plant wheat on 3.6 million hectares, more than the 2009-2010 crop of 3.56 million hectares that was planted during a drought, according to the Buenos Aires Cereals Exchange. The 2009-2010 crop was the least wheat planted since the exchange began collecting data in 1910. Soil conditions for sowing wheat are at the best in a decade, the Rosario Cereals Exchange said July 18.
By contrast, barley planting has surged to an estimated area of 1.35 million hectares in the 2012-2013 season compared with 339,000 hectares in the 2006-2007 season when the government’s policies of capping beef, corn and wheat exports were first put in place by Cristina Fernandez’s predecessor and husband Nestor Kirchner.
This year’s barley crop is forecast to reach 5 million tons, up from 3 million tons last year, Miro said who added that this might attract government’s voracity.
“I wouldn’t be surprised if the government decides to intervene again in the market imposing taxes on barley exportations,” he said. “It would be another mistake, but this government has always taken the consumer side against the producers’ side.”