World Grain - October 2012 - 28

COUNTRYFOCUS

Focus on Argentina
Country forecast to rank second in global grain exports in 2012-13
by Chris Lyddon

Key Facts
Capital: Buenos Aires Population: 42,192,494 (July 2012 est.) Religions: Nominally Roman Catholic 92% (less than 20% practicing), Protestant 2%, Jewish 2%, other 4%. Location: Southern South America, bordering the South Atlantic Ocean, between Chile and Uruguay. Government: Republic. Chief of state and head of government: President Cristina Fernandez de Kirchner (since Dec. 2007). Economy: Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Although one of the world’s wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt and capital flight. A severe depression, growing public and external indebtedness, and a bank run culminated in 2001 in the most serious economic, social, and political crisis in the country’s turbulent history. Interim President Adolfo Rodriguez declared a default — the largest in history — on the government’s foreign debt in December of that year, and abruptly resigned only a few days after taking office. His successor, Eduardo Duhalde, announced an end to the peso’s decade-long 1-to-1 peg to the U.S. dollar in early 2002. The economy bottomed out that year, with real GDP 18% smaller than in 1998 and almost 60% of Argentines under the poverty line. Real GDP rebounded to grow by an average 8.5% annually over the subsequent six years, taking advantage of previously idled industrial capacity and labor, an audacious debt restructuring and reduced debt burden, excellent international financial conditions, and expansionary monetary and fiscal policies. Inflation also increased, however, during the administration of President Nestor Kirchner, which responded with price restraints on businesses, as well as export taxes and restraints, and beginning in early 2007, with understating inflation data. Cristina Fernandez de Kirchner succeeded her husband as president in late 2007, and the rapid economic growth of previous years began to slow sharply the following year as government policies held back exports and the world economy fell into recession. The economy has rebounded strongly from the 2009 recession, but the government’s continued reliance on expansionary fiscal and monetary policies risks exacerbating already high inflation. GDP per capita: $17,700 (2011 est.); inflation: 22% (2010 est.); unemployment: 7.2% (2011 est.). Currency: Argentine pesos (ARS): 4.68 pesos equal 1 U.S. dollar (Sept. 21, 2012). Exports: $84.27 billion (2011 est.): soybeans and derivatives, petroleum and gas, vehicles, corn, wheat. Imports: $70.73 billion (2011 est.): machinery, motor vehicles, petroleum and natural gas, organic chemicals, plastics Major crops/agricultural products: Sunflower seeds, lemons, soybeans, grapes, corn, tobacco, peanuts, tea, wheat; livestock. Agriculture: 10% of GDP and 5% of the labor force. Internet: Code: .ar; 10.928 million (2010) hosts and 1 13.694 million (2009) users.
Source: CIA World Factbook

Chile

Argentina is one of the world’s most important producers and exporters of grains and oilseeds. Its position, in southern South America, means it plays an important role as a supplier of grains when no new production is coming from the Northern Hemisphere. The International Grains Council (IGC) forecasts Argentina’s total 2012-13 grains crop at 47.1 million tonnes, up from 44 million the year before. The IGC puts the wheat crop at 11.5 million tonnes in 2012-13, compared with 14.5 million tonnes the year before. “Recent rains brought some relief to previously dry parts of central Argentina, especially in north-eastern and southern Buenos Aires province, but cooler weather slowed crop development,” the IGC said in its Grain Market Report in August. “With sowing complete, the area is forecast to fall Bolivia Paraguay by 18%, to 3.7 million hectares, contained by competition from more proﬁtable crops and dryness during planting in northern areas.” Brazil A U.S. Department of Agriculture (USDA) Uruguay Argentina attaché report on the sector highlighted problems created by government policy. “Several analysts project an even greater drop, but many producers do not have many alternatives and others need to plant wheat as a cash crop to help ﬁnance the soy and corn crops,” it said. “Producers are disorientated and discouraged as the government is expected to continue to control the local wheat market in order to keep the domestic market well supplied. “The government will reserve 7 million tonnes for the local market and the balance will be allowed to be exported without tranches. Producers claim that this system is making difﬁcult the commercialization of the crop (many still have wheat from past seasons), and prices suffer a signiﬁcant discount due to the lack of competition between local ﬂour mills and exporters.” Most area losses will be in the rich corn belt, where producers

October 2012 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - October 2012

Table of Contents for the Digital Edition of World Grain - October 2012