The president of the Argentine Agrarian Federation, Eduardo Buzzi, announced yesterday that farmers in the country want the protest against the Kirchner administration to continue. “It is a feasible force measure to be extended”, Buzzi said. Other important rural organization, the Argentine Rural Society (SRA) promise to keep the demands to the government and promising to continue strong measures. Luis Etcheverre, president of SRA, declared that they want not just dialogue, but solutions to the current economic problems in Argentina.
The former president of BankBoston and former head of Brazilian Central Bank, Henrique Meirelles, has lectured on the Brazilian economy at the International Fair of the Meat Chain in São Paulo. He explained that the slow down in China and, consequently, in Brazil will bring bad economic results for all sectors in the country. However, Meirelles that agribusiness would be indeed the least affected.
“There are factors that bring positive things for the agribusiness sector. One of these factors is the valued dollar, which brings more profitability for the sector. Even if people consume less, the world’s demand for proteins is still growing and, thus, exports would not be hurt”, he said.
Meirelles used number of meat consumption in China to explain his argument. From 1999 to 2001, the per capita consumption of beef in the Asian country was 12.9 kg per capita. In 2013, the per capita consumption of the Chinese market is 19kg and the current projection for 2030 is 42kg per person.
The former director of Brazil’s Central Bank that Japan tends to open its food market and that would bring a lot of opportunities for emerging markets. “The price of food in Japan is very high. They will need Brazilian imports soon, affirmed Meirelles, who, on the other hand, alerted that the Brazilian government should fix the country’s infrastructure wholes.
Yesterday, the dollar ended up at R$ 2.27 – the highest value in four years. The valued dollar is causing worry because Brazil has a growing inflation. It is happening right now because of the Federal Reserve decision not to curb stimulus programs. Two years ago, the Brazilian worries were about the dollar devaluation and the government intervened in the exchange policy.
Under the tenure of Henrique Meirelles at the Central Bank, inflation remained under the goals. He refused to expand the monetary base even being criticized by some in the Lula administration.
The president of Agricultural Coordenation of the Alto Paraná division in Paraguay, Aurio Fraghetto, has recognized that corn and wheat in the country are being hurt by climate effects. He told media outlets that most grains are coming in the middle of constant rains and that would bring low quality to the corn and the wheat when harvested. “My fear is that strong winds happen here, the plants are wet and dry and a wind would cast all the crongrains”, he said.
Fraghetto also explained that wheat has already suffered with diseases in the region due to excessive humidity. “Our fields would need at least 30 days without rains for us to be able to bring the corn out the farm”, explained.
According to local reports, for the first time in history the price of wheat in Argentina is over US$ 500/ton. The increase is more than 30 percent in just one month. When the bell ringed at the Buenos Aires Futures and Options Exchange, the price was at US$ 518. The situation already impacts all products derived from the grain in Argentinean supermarkets. A similar situation was only seen 60 years ago, when a severe drought made the South American country import the cereal during the government of Juan Dominguez Perón and value reached nearly 50 percent of the soybeans.
The total wheat production in Argentina is projected not to be more than 10 million tons this year, while the domestic consumption is nearly seven million tons.
Brazilian soybean growers will occupy nearly 10 percent of the soybean area in the country with Monsanto‘s Intacta RR2 seed, according to a calculation based on the amount of purchases. The GMO seed was just recently approved by Chinese authorities. So far, Brazilians already bought three million bags of the product.
Producers say that now is the time to test the efficacy of the Intacta RR2. “It’s a new technological generation, the first soybean with natural insticide. But the first space in the crops will be defined by practical results”, said Glauber Silveira, president of the Brazilian Association of Soybean Growers, in an interview to Porto Alegre newspaper Zero Hora.
Monsanto has not defined the seed price, but an initial R$ 115 (US$ 68.61, according to today’s currency) per hectare. The value is six times higher than the current seed (R$ 22 per hectare) – something that worries growers.
By Luís Vieira
Kory Melby, an agriculture consultant who has settled in Brazil for over 10 years, explained in an exclusive interview to AgroSouth News that farmers need to have a few very important things in mind before settling in Brazil. According to Melby, the most entrepreneur pro-business type of investors are the most frustrated when trying to farm and invest in the South American country in general. He says that American entrepreneurs will meet in Brazil government agencies that hinder much more businesses than the American counterparts. American farmers would see at least triple bureaucracy for several things, including simple ones such as opening an account and registering the land, and get their enthusiasm “squashed”.
“Those who believe in limited government and want to get rid of Uncle Sam will get overwhelmed by the Brazilian governmental agencies. Here my opinion has evolved about American government agencies. I concluded that they are nice to business”, told Melby, who is based in Goiânia, Goiás.
The consultant recommended that American farmers who want to settle in Brazil first of all should learn some Portuguese and about the country’s culture. “Some people think that just knowing some Spanish they are okay, but you should know something about the Brazilian culture before starting to work here, affirmed Melby.
Brazil is recommend for dynamic farmers who are seeking vast amounts of last in just one land field, says Melby. The cost of truckage is an item that is also underestimated by Americans. However, that transportation maybe an important cost just outside the farm because there is the possibility of buying over 10,000 acres – unlike the owning different farms in the American corn belt where transporting among farms is needed. “In Mato Grosso, Tocantins, and Goiás is possible to buy farms greater than 10,000 acres at a good price. You find the possibility of growing two corn and soybean crops in a single vast area and adequate weather. On the other hand, good investments would require millions here”, he said.
The latest frontier of soybeans in Brazil is in the Northeastern in the states of Piauí and Maranhão. Consultant Mebly, however, thinks those would not have sustainable investments because of the erratic climate of the areas. “The Northeast can show some erratic climate and droughts over the years”, explained.
Brazil has approved a law in 2011 limiting the purchase of land by foreigners in the country to a total area of approximately 12,300 acres. The legislation diminished the appetite for new American investments on farming in the country, which was seen significantly in Luís Eduardo Magalhães, west of Bahia, and in the state Mato Grosso. There are over 30 American land owners in Luís Eduardo Magalhães.
Nearly three years ago, rice growers from the state of Rio Grande do Sul, Brazil’s largest producer by far (accountable for 60 percent of the country’s production), were in a dire situation. They had to live repeatedly with droughts and mostly with prices that did not pay their costs. Currently, however, these farmers live a very different status.
From 2010 to 2013, the industry had to change its strategies. The international panorama was showing that China and other Asian markets were not that interested on buying rice. Some rice farmers in Rio Grande do Sul were able to shift to soybean production, others have invested in irrigation and in the quality of the grain. In the meantime, Nigeria, Angola, Senegal and other African countries had saw significant economic growth and now are relevant rice importers.
In 2013, the state of Rio Grande do Sul harvested a 7.9 million tons rice crop, according to the Rice Institute of Rio Grande do Sul. The productivity was 74.4 tons per hectare planted in a total area of 2.6 million acres. The price paid right after the harvest for the rice bag (50kg) was nearly R$ 31 (US$ 13) in the state. In the second semester of 2012, the price reached R$ 40.
Safras & Mercado, a consultancy based in Porto Alegre, predicts in a survey released today that right now rice growers will continue to have these prices. The forecast is that prices will get close again to R$ 30, but is unlikely that prices get back to the value of the end of 2012. In Rio Grande do Sul and Santa Catarina, the prices are ranging form R$ 32 to R$ 35. Mato Grosso is paid at R$ 36 due to growing imports from Paraguay in the center-western region of Brazil.
The overall Brazilian rice production occupied an area of 5.9 million acres with 11.5 million tons of production, according to the National Supply Company (Conab). The state which will get the largest increase in production will be Tocantins, in the Center-West. The state will harvest 565,700 tons – up 27.9 percent from the previous crop. In the south, the majority of the areas are seen with irrigated rice, while the center-west grows mostly upland rice.
Approximately 202 million acres is the area projected for the soybean crop this season in Mato Grosso, according to the Institute of Agricultural Economy of Mato Grosso. When this acreage is compared to the 2009/2010 season, it reveals that there was a 33 percent real growth. At the time, the soybean area in the state was 15.3 million acres.
Production has followed the growth of acreage. For this crop, a total yield of 25.2 million tons of soybeans is expected in Mato Grosso. In 2009/2020, the crop was 18.8 million tons. The region which produces more in the state is the center-north with 9.4 million tons projected for this year crop.
Interview: Jorge Isern, president of Sociedad Rural Rosario
By Luís Vieira
Jorge Isern, president of the Rural Society of Rosario (the farmers union of the Santa Fe region), explained in an interview by email how exactly president Cristina Kirchner treats the grain and meat farmers in Argentina. He told in an exclusive interview to AgroSouth News that high taxes on soybean exports (40 percent), a delayed exchange policy, and monthly limitations to export wheat have led the farmers to start a strike last week. Even with scarce wheat in South America, Argentinean farmers are not able to increase production because of government policies.
Isern also commented on the issue brought up by The New York Times, which has put Argentina, once a huge power in meat exports, to the eleventh place in the world in livestock exports.
AgroSouth News – It has been a long time that farmers from Argentina have not had a good relationship with the government of president Cristina Kirchner. What happened in the last few months in this relationship?
Jorge Isern – The agricultural activities in Argentina at the vast majority of its production – grains, meat, milk, fruits, regional – are not profitable. It happens first because the high tax burden, which is discriminatory to the sector, extorsive and in some occasions of rupture. As an example, the delayed exchange which has an official dollar at AR$ 5.30, a parallel at AR$ 8 to make the people get bills and that is its real value until recognized by officials, and received by the Argentine producer of AR $ 3.40 for soybeans, when retaining the confiscatory rights to export , virtually the only country where there it exists. Besides that, we add other taxes that make for the oilseed finally, as yields and regions, the actual collection is between 20 and 30 percent of the international price. Regulations, arbitrary and non-sense interventions, prohibition of exports, and marked lack of interest to listen the growers and our proposals. The situation is very different in other producing countries such as Brazil, where the full price is charged and with stimulation to production and work.
Product of this indifference from the Cristina Kirchner government, we are making a force measure (from June 15 to June 19). The methodology is not selling grains and cattle with a high compliance in the sector.
AgroSouth News – How is the recovery from last year’s drought? In the same period of last year, the bet was soybeans. Do these trends might continue?
Isern – For the emergencies of the previous drought there was no official support, we the producers continue to at our expense, despite Act funds not used by official irresponsibility. The 2012-13 season was better production reaching about 100 million tons (adding all productions), but economic and financial unsatisfactory by bad government policies and still far from the 150 million tons that the National Government proposed as a goal to achieve.
In wheat, for example, we have the capacity to produce 20 million tons, but we achieved nine, the worst harvest of the last 100 years, in meat 3.4 million heads, down to 2.7 million, exporting 7 percent, when we made 15 percent previously. Thus Argentina went from being the third exporter to eleventh place ranking as the worst positioned within the Mercosur countries, in addition to losing 10 million head of cattle during this administration. In milk are stagnant and brokenness getting values when our neighbors grew by 33 percent in the last 10 years and soybeans remains the economic equation that has better albeit disappointing since we began recording negative results in some productive regions of the country.
AgroSouth News – How are the costs to produce soybeans and corn in the Santa Fé province? Last year, I was in other assignment in Rosario when we talked. Then, the cost was US$ 200 per hectare. What has influenced the costs?
Isern – In Argentina soybean planting will probably cost in 2013/14 around US$ 320 with an increase on transportation in more remote areas of ports, ie 1 to 1.2 tons the expected price in this country, a 50 percent increase constant value in the previous cycle. The corn cost is US$ 500 for the same period, 70 percent higher than soybeans. Besides the latter has a higher risk of low international demand and national government regulations, which boasts lower price in the future; certainly result in lower interest on planting.
Domestic inflation increased inputs prices, even more fuel, and even more still import because providers rely predominantly on parallel dollar, much more than in the official.
AgroSouth News – What’s your opinion on the Argentine exchange and monetary policy?
Isern – The Argentine government maintains delayed dollar value, which hurts exports, agricultural and appointees that are added export rights, what we commonly call retentions, with highly negative consequences for production, employment and national income. In my opinion, the policy should be managed with floating dollar, measured by medium-term periods. It is paradoxical that in countries that has such high foreign direct investment index they also have inflow of plenty of dollars and in Argentina is the opposite, which indicates how wrong is the chosen path.
AgroSouth News – How the high renting land prices has affected investments in the Santa Fé region? The soybean giant El Tejar has decided to leave Argentina for this reason…
Isern – The price of renting in Argentina is very high and this system approached to the grief. However, there is high demand for land in the best fitness so that they maintain the value of the lease. It is not as such the the middle condition and/or remote from ports, the intention to rent has declined significantly. The low overall condition are vacant lodgings.
The cost increase measured at a constant value, with a particular focus on the transport, production will draw millions of hectares while distorting economic equation persists without correction-which is possible-unresolved artificially by bad policy from the national government for our sector.
It should be noted that the production system has been leased fields decisive factor for the 200 percent increase in production in the last 20 years, so it is advisable not to neglect and to plan it for development incentives. At least not to lock it with unfortunate interventions.
AgroSouth News – Which is tendency for machinery and inputs investments? In Brazil, for instance, records are set every month. Does the sector need more incentives to invest?
Isern – In Argentina, the agricultural sector needs that the government to to stop with the constant obstacles and that would be the best incentive for industries of machinery and inputs. It is tied to grow all you can, it’s much more than the attained. There are low-rate loans for investment, but on the other hand is confiscated with distorted taxes income which is affecting production contradictory results possible. This adversely affects the industry.
The Agricultural Secretary of the state of Bahia, Eduardo Salles, has made an alert about the Helicoverpa Armigera, which is a caterpillar that has affected corn, soybean, and cotton crops in that Brazilian state. Salles said that the caterpillar will cause inflation soon in the Brazilian supermarkets. “The effects of this plague for agriculture is worst than food and mouth disease for livestock. Besides the losses for the farmers, it will impact the supermarkets price with inflation”, he declared today.
Salles has made a push to release the use of Emamectin Benzoate. It is the only product available to fight Helicoverpa, but the Secretary was threteaned to be arrested if he allows the use in the state of Bahia. “We are going to do integrated management, we are going to use Intacta RR2 (that is now allowed from China), and biological control. We are trying to create conditions for the next crop”, affirmed.