Parts of Argentina are awash in rain and January planting of corn was delayed in the north and centre regions of the country.
German Peyronel, a farmer in Bandera, in the Santiago del Estero province of Argentina, hasn’t been able to plant all the acres he wanted to by now because of the rain and he believes that in some areas where he planted corn, the plants aren’t going to make it through the moisture.
The area usually gets 800 millimetres of rain per year, but in January alone it had 300 mm.
Peyronel spent much of January in Canada, visiting his sister, Fernanda Peyronel, a technician at the University of Guelph, with a PhD who works at the nano level in food science.
Fernanda translated for Farmtario during an interview with her brother at her home in Guelph.
Why it matters: Argentina is the world’s third largest producer of soybeans and it is playing a key part in the global changes in the soybean product flow due to U.S. and Chinese tariffs.
The Province of Santiago del Estero, where German Peyronel farms is usually dry, but the past few years have seen a significant increase in moisture, resulting in challenges that farmers aren’t used to, including more crop diseases caused by humidity and damp conditions, and more issues getting the crop planted. The extra rain has, however, increased yields.
In that area of Argentina, north of the main growing area of the Pampas, they usually get two crops per year — wheat and soybeans or corn. In an exceptional year, they have been able to get two crops of soybeans.
Depending on the year and crop rotation, they will either plant corn in September or corn in January or February.
Peyronel has also planted cotton.
He owns 740 acres and runs 3,000 acres more for other people. Of those acres, he plants about 700 acres in corn and the rest in soybeans — the crop that really pays the bills in Argentina.
“If you want to make money in Argentina, you really have to work soya,” he said.
Corn seed is expensive, he said, and at average yields of 2.5 tonnes per acre of corn, breaking even is challenging, especially if renting land.
Soybean seed is often saved, reducing the cost of planting.
Another barrier to farmer profitability is access to infrastructure. The only railroads were built generations ago and don’t follow modern flows of the grain trade. As a result, most of the crop is trucked long distances to ports and often at harvest. The crop is usually dried at port.
Peyronel’s cost of trucking is 10 to 13 per cent of the price that he is paid at delivery at the port.
About half of Peyronel’s crops are trucked at harvest to Rosario, the closest port city, 520 kilometres away. Other farmers in further-north provinces have a 1,000 km trip to port. The lineups of truck can be very long, with 6,000 trucks per day arriving at the port during harvest. Peyronel no longer owns his own truck, and hires all the trucking done.
Just up the Parana River from Rosario is San Lorenza, where the world’s largest group of soybean processing plants streams soybean oil and soybean meal for use around the world.
Soybeans drive farming in Argentina, and in fact drive the overall economy.
A “retention” or tax on soybeans by the government is currently at 30 per cent. The current government, with President Mauricio Macri in charge, cut the retention from 35 to 30 per cent. At one point it was eliminated completely, an exciting day for farmers, but after two months, the government found it couldn’t live without the revenue, said Peyronel, and moved it up to 30 per cent.
The previous government had set the retention on soybeans to rise with inflation, but opposition quashed that proposal.
At one point the retention was 20 per cent for corn and wheat too, but the current government removed it. Another part of the government control was quotas given to exporters. There wasn’t enough quota to export the amount of wheat produced, which meant that wheat was left rotting in storage because there was too much of it for Argentinians to eat through.
“It’s the easiest way to collect money for the government. Nobody likes it. As a farmer you know that’s what is happening,” said Peyronel.
Similar to Canada, there’s an urban and rural divide. In Buenos Aires, with 15 million people, they have little understanding of the role of agriculture, which Peyronel says funds the country.
Governments change the conditions for farming regularly. The current government is friendly to agriculture and has created conditions for farmers to invest and grow. There’s an election later this year, and that all could change.
Peyronel toured several Canadian farms, although in January, there wasn’t a whole lot to see in the crops side.
He found the number and small scale of elevators surprising, as was the size of new equipment used to cultivate a smaller number of acres than it would in Argentina.
A tractor used by an Ontario farmer he visited who works more than 3,000 acres would still not be used by a farmer in Argentina who works more than 10,000 acres, he said.