Argentine wheat policy sows uncertainty among farmers

Fri Feb 1, 2013 3:43pm EST

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* Argentina curbs wheat exports to ensure local food supply
    * Government to modify 2012/13 wheat export quota in March
    * Will announce 2013/14 quota later in the year

    By Hugh Bronstein
    BUENOS AIRES, Feb 1 (Reuters) - Wheat farmers and exporters
in Argentina say the government should announce new-crop export
quotas as soon as possible if it wants to spur sowing and lock
in high global prices after years of declining output.
    Argentina is a major world supplier of wheat, soy and corn
at a time when consumer nations are clamoring for South American
grains to compensate for disappointing harvests in breadbaskets
Russia, the United States and Australia.
    However, the government limits wheat and corn exports to
ensure ample domestic food supplies. Growers say the policy
keeps them guessing about how much wheat to plant and some have
swapped to alternative crops that can be exported freely like
soy and beer barley.
    David Hughes, who manages 7,500 hectares in Argentina's main
agricultural province of Buenos Aires, wants the government to 
announce the upcoming season's exportable wheat quota by March.
    "Between January and March, farmers analyze their production
plan," he said. "They look at the proportion of crops they will
plant, according to factors including market conditions."
    To properly organize wheat seedings, Hughes said he needs to
know months in advance how much he will be allowed to export.
But there has been little certainty about when the government 
will announce each season's quota.
    Wheat planting in Argentina starts in late May and ends in
August, with most seeds going into the ground in June and July.
    To encourage ample seedings, Alberto Rodriguez, head of the
CIARA-CEC grains exporters' chamber, said the government should
announce the export quota as soon as possible.
    "We're sure the next wheat crop in 2013/14 will be bigger
than the current season's. But that depends on the exportable
surplus being determined ahead of planting season, so farmers
can plan ahead to take advantage of good world prices," he said.
    Government officials were not available to talk about the
specific timing of the 2013/14 wheat quota announcement. "It
will be after a couple of months," a government spokesman said.
        
    'GOOD WORLD PRICES'
    Chicago wheat futures are up 17 percent from a year
ago. But at 3.48 million hectares, Argentina's 2012/13 wheat
area was the lowest since the government adopted its modern
record-keeping system 44 years ago.
    The agriculture ministry estimates the recently completed
2012/13 wheat harvest at 10.1 million tonnes. The crop was
reduced by early-season flooding and will be far under the 14.1
million collected in the 2011/12 season.
    Last year, before the floods, the government said it would
free 6 million tonnes of 2012/13 wheat for export.
    Internal wheat demand in Argentina is also about 6 million
tonnes, leaving exporters to wonder how much the government
might cut its original wheat shipment quota. A decision should
be announced on the remaining old crop quotas next month, an
agriculture ministry spokesman said.
    In the recently harvested 2012/13 season, farmer Hughes said
he planted 300 hectares with wheat, down from 500 hectares in
the previous year and 900 hectares the season before that.
    Like many growers tired of the export quota system and
uncertainty over the price they will get in the local market, he
has dedicated more and more land to barley instead.
    Barley production shot up to just under 5 million tonnes in 
2012/13 from less than 800,000 tonnes in the 2005/06 crop year,
before Argentina enacted its current wheat export policy.
    That trend will likely continue when new crop sowing starts
unless the government takes drastic action, analysts say.
    "The outlook for the wheat sector is poor even though the 
international market is offering high and stable prices," said
Gabriel Perez, director of agricultural consultancy Mercampo.
    "Because of the government's export regulations, the amount
of land dedicated to wheat farming will remain a shadow of what
it could be," he said.

 (Additional reporting By Sam Nelson in Chicago and Maximilian
Heath;editing by Sofina Mirza-Reid)
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