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Argentina Agribusiness Report Q2 2009
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Argentina |
Published |
21 April 2009 |
Number of Pages |
51 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
In the Argentina Agribusiness Report for Q2 2009, we introduce the new Business Environment section. This section gives an overview of agriculture in Argentina and its significance to the overall economy and labour market. We also cover support given to agriculture by the government.
The year 2009 looks set to be another turbulent year for Argentina's agricultural sector after the protests and strikes of 2008. However, this year the problems will be against a backdrop of falling prices and plummeting production, rather than the rising profits for farmers through the first half of last year.
While farmers will struggle to pin blame for the worst drought in more than half a century at the government's door, industry bodies are in doubt as to who is responsible for many of the other problems facing the sector. For the first three months of 2009, farmers returned to the streets repeatedly to call for ends to restrictions on exports and more support for farmers hit by the drought.
In mid-March, the government relented somewhat and signed into law a raft of measures to help farmers.
The measures include compensation for meat producers hit by the drought, subsidies for grain producers, the removal of export duties on dairy products, and price support for the difference between domestic and international grain prices. Whether this will be enough to keep farmers in the fields, instead of out in the streets, is yet to be seen. With important mid-term elections coming up this year, it would be in President Cristina Fernandez' interest to not further aggravate those in the agricultural sector, which still employs around 7% of the labour force. Other news in March that is not likely to be welcomed by farmers is plans reported by Reuters for a new agency to influence the price of grains. The agency would be controlled by the government and would manage the trade of wheat, corn and soybeans. This would allow the government to ensure adequate and cheap food supplies before the election, but this is sure to be violently opposed by farmers if the plans look like they will become reality.
One blessing in disguise for the sector could be Argentina's increasingly poor trade and shortage of foreign currency, which could force the government to liberalise its export policies to encourage agricultural exports, bringing in much needed export revenues.
On the whole though, with the Argentine economy forecast by BMI to contract by 1.0% this year, by 0.9% in 2010 and output of key crops such as wheat and corn expected to fall dramatically, this is set to be a miserable year for Argentina's agricultural sector. Cereals will not be the only sector to see falls in production. We also expect the livestock and dairy sector to be hit by falling demand and the dry conditions. Even Argentina's iconic beef is in for a tough year, with exports likely to be down significantly, despite the government raising the export quota.
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