Argentina's wheat crop could fall below domestic demand

Argentina's wheat acreage is expected to fall to a minimum, with a crop barely sufficient to supply the domestic market and no surplus to export to its main market Brazil, according to the wheat farmers association.

The government got it wrong with its policy to control domestic wheat production to contain food prices, said association president Santiago Cameron.

Cameron said the lack of wheat supply is due to the government lowering export quotas, imposing export levies and climate adversities along with ridiculous farm policies.

The trouble began in May 2006 when the government decided to intervene in the market, Cameron said.

Argentina's wheat farmers fear that with the current situation, Brazil could increase its production, making the farmers lose an important client. Brazil is expanding its wheat area and are negotiating long-term agreements with Russia and China to exchange products for wheat, said Cameron.

Cameron said the wheat sector needs clear rules and export licenses if farmers are to be encouraged to till the land and plant wheat this winter, so they can recover crop volumes.

Argentina normally harvests 16-24 million tonnes of wheat, of which six million tonnes are for domestic consumption. This year, the crop could fall to less than eight million tonnes.