January 4, 2006

 

Argentina's daily soy crush capacity soars

 

 

Argentina's daily oilseed crush capacity is rising quickly, according to a report issued Tuesday by Fundacion Producir Conservando, a local think tank. The report compares Argentina's oilseed industry with that of Brazil and the US.

 

Argentina--which is already the world's leading soyoil and soymeal exporter--will boost its daily soybean crush capacity to 154,175 tonnes by the end of 2007, the foundation said. That would put soybean crush capacity up 34 percent in two years.

 

The report's author, Gustavo Lopez, estimated Argentina's current daily soybean crush capacity at 115,000 tonnes per day.

 

Lopez's forecast, which is based in part on data provided by the local brokerage JJ Hinrichsen, shows Argentina's daily crush capacity comparing favourably with that of Brazil, which is seen totalling 143,205 tonnes within the next couple of years. Meanwhile, Lopez said Argentina is catching up with the US, whose capacity is forecast at 159,000 tonnes.

 

"Our country has a series of advantages," Lopez wrote in the report. "These include lower crop planting costs, reduced use of fertilisers, fewer climatic impediments, good soil, fewer sanitary problems (Asian rust, etc.) ... which make it an excellent producer not only of soybeans, but also of other oilseeds ..."

 

Meanwhile, Argentines consume very little oilseed compared with residents of Brazil and the US. This allows Argentina to export a more of its product than either competitor.

 

Argentina exports more than 95 percent of its oilseed production.

 

In addition, most of Argentina's soybean crops are produced near ports and processing facilities. This reduces transportation costs and makes it easier for Argentines to competitively price their soybean products.

 

"In this sense, we see a clear competitive advantage for Argentina over Brazil both in soybean production and the industrialisation and export process," the report said. "This reflects a structural difference between the respective processing industries (in these countries). Because of its location, volume, technology and (production) scale, Argentine plants, which were designed to export, are among the most modern and efficient in the world."

 

Thanks to hundreds of millions of dollars in recent investment, Argentina has some of the world's newest and biggest oilseed processing plants, the report said. Indeed, by late 2007 the average crush capacity for Argentina's plants will total around 3,280 tonnes/day, compared with 1,235 tonnes/day in Brazil and 2,271 tonnes/day in the US.

 

Moreover, crush capacity at Argentina's biggest processing plant will be almost twice as high as the largest plant in Brazil or the US, according to the report.

 

Cargill--one of the world's leading oilseed export companies--plans to produce 13,000 tonnes of oilseed per day at one plant alone in Argentina. That will be close to double the output from the biggest plant in the US, which is owned by Archer Daniels Midland (ADM). Cargill's biggest US plant crushes just 3,810 tonnes/day.

 

However, the report cautioned that Argentina needs more investment in infrastructure to keep boosting output, and highlighted the need for better grain-storage facilities.

 

"This will allow for a more rational (grain) trade, offering producers the possibility to sell grain outside the usual harvest season and thereby allow them to avoid the declining prices that can accompany the end of a harvest," the report said. "This also will help farmers to avoid unnecessary losses caused by using deficient storage facilities."

 

The report also said improved storage capacity will allow Argentines to segregate and classify their grains.

 

More investment also is needed in roads, trains and waterways to increase production and export efficiency.

 

Finally, the report said the Argentine government needs to find ways to protect the intellectual property rights of biotechnology firms so that farmers here can continue to access new products like GM soybeans.

 

"While many of the processing and logistical issues are resolved, it is necessary to work on the rest of these issues so we can have an agile and efficient agricultural industry over the next decade ...," the report said.

 

Argentina's oilseed crush facilities normally operate about 330 days/year, and only shut down for repairs or equipment upgrades, Lopez said.