* Wheat-hungry govt puts rival barley in the crosshairs
* Wheat plantings down as farmers skirt export curbs
* Consumer nations look to Argentina for more food supply
By Hugh Bronstein
BUENOS AIRES, March 8 Grains behemoth Argentina
is pushing farmers to produce more wheat by threatening to crack
down on the fast-expanding barley sector, which growers are
using as a hedge against export curbs, sources with direct
knowledge of the situation told Reuters.
With national inflation seen by private economists at 30
percent this year and global food demand rising, Argentina
limits wheat and corn exports to ensure ample domestic supplies.
But farmers say this policy hurts their profits and have
shifted toward planting barley, which is not subject to the
curbs. While Argentine barley cultivation is soaring, the wheat
crop is forecast at 9.4 million tonnes this season - way under
the 2011/12 crop year's 14.1 million tonnes.
Domestic Commerce Secretary Guillermo Moreno, feared by
business as chief enforcer of the government's frequent market
interventions, told exporters this week that further growth in
barley farming at the expense of wheat would not be tolerated.
"He said that if farmers keep growing barley instead of
wheat he will increase export taxes for barley and curb
exports," said an industry source who was at the Wednesday night
"It is a threat. If wheat plantings keep falling, he will go
after the substitute crop, whatever it may be," said the source,
who asked to remain anonymous. "But the real issue is the policy
model, because the more intervention there is in the wheat
market, the less acreage he will get from farmers."
This account was confirmed by another industry leader at
the meeting. Neither Moreno nor the representatives he
negotiates with talk publicly about their discussions.
President Cristina Fernandez has increased the government's
role in Latin America's third-biggest economy, putting her at
odds with farmers who say she is chasing off investment and
keeping the country from meeting its agricultural potential.
Global food markets want more wheat from Argentina to offset
recent disappointing harvests in breadbaskets Russia, the United
States and Australia.
Lack of corn and wheat - a key ingredient in bread and other
staples - could put basic foods out of reach for poorer nations
already struggling with the sluggish world economy and high
unemployment, increasing the risk of rebellion and other
upheavals in emerging markets.
Argentina needs about 6 million tonnes of wheat annually for
domestic consumption. The government has approved 3 million
tonnes of wheat to be shipped overseas in the 2012/13 crop year,
having halved its original export quota due to low supply.
Most of the country's wheat exports go to Brazil and North
Africa. At 3.48 million hectares (8.6 million acres),
Argentina's 2012/13 wheat area was the lowest since the
government adopted its modern record-keeping system 44 years
Barley output has shot to just under 5 million tonnes, split
about evenly between beer barley and that used in animal feed.
Production was less than 800,000 tonnes in the 2005/6 crop year,
before the government started limiting overseas wheat shipments.
Nearly all Argentine barley is grown for export. Brazil is
its top beer barley client while feed barley goes to far-flung
destinations including Saudi Arabia, mostly to feed camels, and
The government slaps a 20 percent export tax on barley, less
than the 23 percent levy on wheat shipments and the 35 percent
tax placed on soybeans. Barley is a secondary crop in Argentina,
where soy and soy byproducts are the top exports.
Growers say the curbs placed on international wheat sales
keep them guessing about how much wheat to plant each season and
reduce competition among the exporters who buy their crops.
"If the government keeps insisting on arbitrary export
quotas, they will not be able to reach the 5 million-plus
hectares that were planted with wheat before the interventions
began in 2007," said David Hughes, who manages farmland in the
key agricultural province of Buenos Aires.
(Reporting by Hugh Bronstein; Editing by Dale Hudson)