However, the economic environment has changed recently, and much of Argentina's additional production potential may remain untapped for a considerable time. Weak international commodity prices crisis continue to limit the ability of export markets to absorb new production and dampen incentives for growth.

Recent gains in production have been driven by area expansion, and by dramatic increases in yields, due to improved genetics and more use of fertilizers, irrigation, and machinery. Future growth is expected to manifest itself more in the form of higher yields, as opposed to area expansion. Yields of wheat and corn are still considerably lower than in the United States, but with continued adoption of higher yielding plant varieties and more intensive input use, Argentina may rapidly close this gap.

Argentina is an important competitor to Australia, Canada, and the United States in world wheat markets. It has developed a high-quality wheat standard—Trigo Plata—to improve the image of Argentine wheat, better meet customers' needs, and allow producers to benefit from producing higher quality wheats. In the ERS baseline forecast, Argentina's wheat area is projected to grow modestly, but average yields are anticipated to grow about 1 percent per year, and production and exports are expected to continue to increase throughout the baseline period. Argentina should easily maintain its place as the fifth-largest wheat exporter in the world, with Brazil likely remaining the major export destination.

Argentina is the world's second-largest corn exporter after the United States, but its yields are still much lower than those of the United States. Some analysts believe it is Argentina's corn crop that holds the most potential for expansion via higher yields. In the baseline forecast, corn exports expand rapidly throughout the period as production far outpaces consumption growth.

Rapid expansion in soybean area between the early 1970s and the mid-1990s was fueled by the high profits earned by Argentine soybean farmers. During a period of favorable soybean/corn price ratios between 1985 and 1990, area devoted to corn dropped 1.4 million hectares while soybean area expanded by 1.45 million. Since 1999, Argentina's soybean area has expanded even more dramatically as land previously devoted to other crops such as rice, vegetables, grains, and sunflower seed has been replaced with more profitable soybeans. Although soybean harvested area is projected to increase at a modest rate in the baseline forecast, much of this additional area will come from marginal land, with average yields experiencing little growth.

The oilseed crushing industry in Argentina has undergone rapid expansion in the last 15 years, resulting in greater and more efficient capacity. Concentration among fewer, more efficient firms is expected to continue. Both local and international firms are expanding crushing capacity by modernizing existing plants and building new ones. Argentina is already the world's largest exporter of soybean oil and the second-largest exporter of soybean meal. Most of the additional soymeal and oil production is expected to be exported, ensuring that Argentina remains a world leader in soymeal and soyoil exports.

Livestock
Argentina's livestock sector has benefited less from the reforms of the 1990s than the grain and oilseed sectors, and by the end of 1997 the Argentine cattle inventory stood at just 49.2 million head, the lowest level in 27 years. The decrease was due to drought and very competitive grain and oilseed prices prompting farmers to increase slaughter and devote more land to crops. Since that time, cattle numbers have increased by about 1 percent per year.

The most significant recent developments in the Argentine livestock sector have related to efforts to eradicate foot-and-mouth disease (FMD). In August 1997 the United States announced that it would declare Argentina "free of foot-and-mouth disease with vaccination," qualifying Argentina to ship uncooked beef to the United States for the first time in over 60 years. Argentina announced in February 1999 that it had concluded its vaccination program and was FMD free. As a consequence of these developments, it had been anticipated that many new markets would open up to Argentine fresh and frozen beef products.

However, in August 2000, Argentina issued a voluntary ban on beef exports due to the re-detection of FMD and initiated other measures to control disease spread. In December of 2000, the ban was lifted under amended regulations, but it was reinstated in March 2001 after the detection of FMD in a number of areas of Uruguay, Paraguay, and Argentina.

References
The Foreign Agricultural Service office in Buenos Aires prepares annual reports on the following commodities. The latest reports and archives of earlier reports are available through the Foreign Agricultural Service (FAS).

• Canned deciduous fruit
• Citrus
• Cotton
• Dairy and products
• Fresh fruit
• Grain and feed
• Livestock and products
• Oilseeds and products
• Planting seeds
• Poultry and products
• Sugar
• Tobacco
  

World Agricultural Supply and Demand Estimates reports provide monthly updates of production, use, and trade for Argentine wheat, soybeans, soymeal, and soyoil.

FAS Oilseed circulars (monthly) provide analysis and data on production, use, trade, and prices in Argentina's oilseed sector.

FAS Current World Production, Market and Trade Reports provide analysis and data on grains, livestock, oilseeds, and other commodities important in Argentina.

Understanding the longer-term outlook for Argentina's agricultural
production, trade, and policy is critical to the development of USDA's
baseline projections for U.S. agriculture. For more information, see
the USDA Agricultural Baseline Projections briefing room.

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page updated: June 5, 2003