Argentina’s farmers have suffered a dramatic loss of competitiveness in relation to Uruguay and Brazil

RIO DE JANEIRO, BRAZIL – In the midst of withholding taxes, the obstacles to export products such as wheat and corn and the imbalances that, due to the lack of dollars, make imports of inputs more expensive, Argentine producers must allocate much more grain to buy a ton of fertilizer than their peers in Brazil and Uruguay.

This is the result of a survey carried out by the consulting firm Globaltecnos for a group of producers. This is an alert that may have an impact on producers’ next sowing decisions.

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According to the report, in wheat in Argentina, in order to compare one ton of diammonium phosphate, producers need to sell 340 kilos of cereal more than their peers in Uruguay and 1,360 kilos more than in Brazil.

In Argentina, with 4.20 kilos of wheat one kilogram of diammonium phosphate is bought, while in Uruguay 3.86 kilos are needed and in Brazil 2.84 kilos.

“There are three factors for this to happen. The first and fundamental one is that the rest of the countries don’t have retentions like Argentina. The second one is that, as there are the so-called equilibrium balances (actually, they are called equilibrium volumes that the Government sets and the export cannot exceed), cereals in Argentina do not copy the international market as our neighbors do all the time. In addition, thirdly, the inputs imported by our country have a cost overrun due to the problems to obtain dollars to import”, explained Sebastián Gavaldá, executive director of the consultancy firm, on the reasons why Argentine producers must allocate more grain to purchase fertilizers.

Continuing with wheat, and now considering urea fertilizer, to buy one ton of wheat in Argentina 210 kilos more than in Uruguay and 1,080 kilos more than in Brazil, according to the report.

In this fertilizer, in Argentina it takes 3.80 kilos of cereal to buy one kilogram of urea. Meanwhile, in Uruguay it takes 3.59 kilos and in Brazil 2.72 kilos.

The consultant’s work also analyzed the situation for corn. In this cereal, it detailed, to purchase a ton of diammonium phosphate, producers in Argentina require 750 kilos more corn than in Uruguay and 1,290 kilos more than in Brazil.

Meanwhile, to buy a ton of urea in Argentina requires 600 kilos more corn than in Uruguay and 1020 kilos more than in Brazil, according to the report.

REASONS

To give an example, in Argentina it takes 4.20 kilos of corn for one kilogram of diammonium phosphate. On the other hand, in Uruguay it takes 3.45 kilos and in Brazil 2.91 kilos.

Pablo Torello, one of the producers linked to the consultant’s report and also a national deputy for Juntos por el Cambio, warned that Argentina is losing competitiveness and planting could fall.

“If they do not understand what is happening (referring to the Government), we are going to have less of everything. There is a lack of competitiveness,” he pointed out.

“We have export duties, exchange rate differential, closed exports, they do not let us import, there is an increase in inputs in the world. All this is an attempt against investment”, Torello said.

He warned that in the current scenario less kilos of fertilizer, for example, could be used and this could have repercussions on production. Torello recalled that when the barriers to export wheat and corn were removed (a measure applied by the previous government), 10 million tons more of wheat and 25 million extra tons of corn “appeared” in the country.