March 10, 2021
Reduced wheat sowing in Argentina due to Chinese demand for barley
Wheat sowing in Argentina is set to drop this year as farmers are concerned over the risk of state intervention in the market, while new growing demand from China for barley may persuade some farmers to switch crops, Reuters reported.
China usually obtains barley from Australia, but that channel has been sidelined due toa bilateral trade dispute. Argentina has emerged as a new key supplier for the crop, along with Canada and France.
Both wheat and barley compete for growing area on the Pampas grains belt in the country, usually planted midyear.
Ezequiel De Freijo, head economist at the Argentine Rural society, said barley has emerged as an alternative crop for farmers that want to lower regulatory risks for the upcoming season, but it is an option for select farm areas. The society represents Argentina's biggest farmers.
Many farmers were affected when the government capped corn exports earlier this year to hold down inflation. Argentina's agriculture ministry later aborted a plan to increase wheat export taxes following protests from farmers.
Jorge Chemes, head of the Argentine Rural Confederations, said the government showed flexibity after facing resistance.
Farmers are concerned that President Alberto Fernandez could intervene in the wheat market as the government needs to raise money and hold food prices down.
De Freijo said farmers are expecting more regulatory uncertainty during the next wheat season.
Back in 2008, former Peronist President Cristina Fernandez (and current vice president) capped wheat exports until 2015. During that period, wheat planting declined to 3 million to 4 million hectares from 5.5 million hectares.
Barley has become an attractive alternative crop for farmers this season as there is growing demand from China. China is looking to purchase high grain volumes to rebuild its swine herd ravaged by African swine fever.
According to the Buenos Aires Grains Exchange, Argentina farmers harvested 17 million tonnes of wheat from 6.5 million planted hectares last season. The farmers brought in 4.1 million tonnes of barley from 900,000 hectares last season, based on exchange data. No forecasts have been made for the 2021/2022 sowing season.