BUENOS AIRES (Reuters) - Argentina’s key resource, its agricultural soils, are being depleted by lack of crop rotation as soy farming encroaches on areas once used for corn, wheat and cattle grazing, according to local experts and a government source.
The loss of fertility is a slow-burning threat to crop yields at a time when importers are counting on the world’s No. 3 corn and soybean supplier to increase output to help meet the boom in demand expected over the decades ahead.
The geopolitical stakes are high after Arab Spring and other uprisings were sparked in part by high food prices brought on by crop crises over recent years. China uses Argentine soybeans in animal feed, as the Asian giant’s increasingly powerful middle class comes to demand a higher protein diet of beef and pork.
On the Pampas farm belt, the trend toward soy at the expense of corn could rob Argentina of its natural advantage as an agricultural powerhouse in the decades ahead.
The country’s farm sector has long feuded with President Cristina Fernandez, who was re-elected in 2011 on promises of increasing state control of Latin America’s No. 3 economy.
Her government limits corn and wheat exports through quotas that can be raised and lowered through the year, dampening competition among buyers and pushing growers toward soybeans, which are taxed at 35 percent but not subject to export curbs.
That’s bad for soils in need of regular corn planting. The stalks left by corn provide mulch that allows rain to enter the ground. When water can’t sink in, the runoff carries away soil nutrients and makes fields more vulnerable to summer dry spells.
“Because corn and wheat cultivation is punished by the government, farmers are forced to cut their risks, focus on short-term profits and plant soy,” said Manuel Alvarado Ledesma, an agricultural consultant in Buenos Aires.
“If no incentive is provided to rotate crops, Argentina will deplete its soils, with the weakest areas turning into a sort of sand in a few years,” he said.
Argentina’s soy planting area has zoomed to a projected 20.65 million hectares for the current 2013/14 season from 14.5 million a decade earlier, according to the agriculture ministry.
Corn seedings are meanwhile projected at 5.7 million hectares this season, down from 6.1 million in the 2012/13 cycle but well above the 2.99 million hectares seeded ten years ago.
Farmers know that six million hectares of corn is not enough to balance 20 million hectares of soybeans.
“We want to provide as much grain as possible for our domestic market and for the world, and we want to do it in a sustainable way. But unfortunately our government policies do not allow us,” said farmer David Hughes, who manages thousands of hectares in the key agricultural province of Buenos Aires.
Complaints about government intervention are heard from other business sectors as well. Fernandez has nationalized the country’s main oil company, cut access to U.S. dollars in a bid to halt capital flight and increased state spending ahead of the October 27 mid-term congressional vote.
Annual inflation is clocked by private economists at about 25 percent, one of the world’s highest rates.
SOIL GETS “BURNED”
Soy takes more out of the soil than farmers can afford to put back by way of fertilizers. Only 37 percent is restored, meaning that 63 percent of each season’s loss remains lost, according to government data.
“The process of land degradation is a fact,” said a government source with direct knowledge of the problem but who asked not to be identified.
“It is happening slowly in areas of the country with the best soils and faster in areas with lower soil quality. But it is happening,” the source said. “Over the long term, the country is losing yield potential. That’s the biggest danger.”
Corn seeds and fertilizers are about twice as expensive in Argentina as those used in soy farming, another factor pushing growers to plant soy on top of soy.
“The soil is getting burned by the lack of organic material left behind by each corn crop,” the government source said.
The area dedicated to Argentine wheat, which is also subject to export curbs, has meanwhile shrunk to 3.4 million hectares from 6 million ten years ago.
The U.S. Department of Agriculture sees Argentina’s 2013/14 soy output at 53.5 million tons, corn at a downwardly-revised 26 million tons and wheat at 12 million tons.
Fernandez caps corn and wheat exports to ensure ample local food supply and control inflation.
Food prices in Argentina are still up as millers run short of grain to make bread and other staples due to a miscalculation in the size of the 2012/13 wheat crop that allowed for an initial rush of exports, leaving domestic stocks painfully thin.
Officials have hinted at coming modifications to the export curbs as pressure mounts on the government to come to terms with farmers. The farm sector is a key pillar of the economy even though it offers relatively few votes and carries little Congressional clout due to the low population of the Pampas.
The government will eventually have to face the fact that lower quality soils will mean lower farm tax revenue.
Locked out of the international capital markets since its 2002 sovereign default, Argentina depends on farm revenue to fund social programs for the poor, particularly in the heavily-populated Buenos Aires suburbs.
“The lack of crop rotation will not cause a disaster over the next five to 10 years, because Argentine soils are naturally very rich,” the Argentine government source said.
“Over the longer term the physical structure of the soil is being depleted. The consequences for future generations are unpredictable.”
Editing by Andrew Hay
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