Argentine Farmers May Increase Wheat Acreage on Government Plan

Argentine wheat farmers, who reduced acreage for the past two seasons, may increase sowing areas as the government proposes reimbursing grain export taxes, said analysts from the three largest grain exchanges and the spokesman for Argentina’s largest wheat farming group.

Argentina, South America’s largest wheat producer, is poised to disclose today a proposal to reimburse as much as 23 percent export tax for the 2013-14 season, according to a grain exporting official, who can’t be named as the plan will be announced by President Cristina Fernandez de Kirchner during a speech scheduled to start at 7 p.m. local time tonight. Argentine wheat exports slid to a record low after the country halted grain exports in December to ensure domestic supply.

“A few farmers may believe in this promise and may return to planting wheat,” Aldana Ferradas, analyst from Bahia Blanca Grain Exchange, said in a phone interview from the city 687 kilometers (426 miles) south of Buenos Aires. “The government announcement will arrive right on time to convince them as planting is expected to begin late this month and in June.”

Argentina’s barley, which isn’t taxable, soared to 1.2 million hectares (3 million acres) last season from 273,000 hectares in the 2005-2006 season, according to an April 8 report from the grains exchange in Bahia Blanca, known as the country’s wheat belt. Ferradas thinks a 10 percent increase in wheat acreage may be triggered by the reimbursement plan.

Government Revenue

“The promised reimbursement may tempt a few farmers,” Raul Maestre, a spokesman for farmers association Aaprotrigo, said in a phone interview from Bolivar, Argentina, 358 kilometers southwest of Buenos Aires. “A key element will be if the plan comes with a decree rather than just a verbal promise as the government is expected to lose $500 million in taxes.”

Argentina’s Trade Secretary Guillermo Moreno, who created the plan to boost wheat planting, didn’t reply to a phone call and an e-mail seeking comment.

President Fernandez and her predecessor and late husband Nestor Kirchner have been limiting exports of wheat and corn since 2006 to avoid local food shortages, a policy that has curbed wheat output. Argentina harvested 15.9 million tons of wheat in the 2010-2011 season, 14.5 million in 2011-2012 and 9.4 million in 2012-2013, according to figures published on the website of the agricultural ministry. Argentina’s planted area was reduced by 29 percent to 3.28 million hectares last season.

“Weather conditions to plant wheat are very good, soil humidity is perfect,” said Tomas Parenti, an analyst for the Rosario Grains Exchange, located in the largest grain and oilseed Argentine port exporter. “These conditions will indeed motivate more wheat planting.”

To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.