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Monsanto bullish on Argentine corn, sees output jump
by Hugh Bronstein
Reuters Translate This Article
2 August 2012
BUENOS AIRES (Reuters) - Global seed giant Monsanto Co expects Argentine corn output to jump more than 40 percent in the upcoming season thanks to high commodity prices, a new planting schedule meant to avoid drought and state support of biotechnology, a company official said.
Argentina is the world's No. 2 corn exporter after the United States, where a Midwest heat wave ignited supply worries and pushed up global prices in recent weeks.
With vast areas yet untapped by corn farmers, the South American country will be counted on to help make up for U.S. drought-related losses.
This is one of the reasons why Monsanto's Pablo Vaquero, a vice president for southern Latin America, expects 2012/13 Argentine corn output to shoot to about 30 million tonnes. Farmers start sowing the new crop later this month.
The company originally forecast a drop in corn area this season. Considering the global price rally, however, Vaquero said he now expects an area of up to 5 million hectares (12.4 million acres), compared with 4.5 million to 4.7 million in the 2011/12 crop year.
He sees Argentine corn area rising to more than 6 million hectares over the next five years.
Starting this season, growers will begin planting at later dates to avoid droughts during the Southern Hemisphere summer, such as the one that struck last December and January just as corn entered its key growth stage.
'This change in planting schedule is giving farmers more predictability on yields. Weather predictions are also better than they were last season. So in 2012/13 we are looking at potential corn production of 30 million tonnes,' Vaquero said in a telephone interview on Thursday.
Official estimates are not yet available for 2012/13 corn. Output in the 2011/12 season will be 21 million tonnes, according to the Agriculture Ministry, well short of the record 23 million tonnes of Argentine corn collected in 2010/11.
The U.S. Department of Agriculture forecasts Argentina's 2012/13 corn crop at 25 million tonnes.
Monsanto—the world's largest seed company and a developer of genetically engineered corn, soybeans and other crops—is building a $100 million corn-processing plant in Cordoba province set to open in 2014.
The move shows Argentina remains interesting to investors despite a years-old feud between farmers and left-leaning President Cristina Fernandez.
Growers accuse the 59-year-old Peronist leader of trampling profits with policies such as currency controls that limit access to U.S. dollars, wheat and corn export curbs meant to ensure affordable domestic food supplies, and the 35 percent tax her government slaps on soybean exports.
Vaquero, however, praised Fernandez's support of the genetically modified seed technology that will help corn growers push into northern provinces—such as Salta and Tucuman—that are outside the country's traditional corn belt.
Just this week, the government approved the use of a new variety of GM corn developed by Dow AgroSciences and Monsanto.
Some environmental groups have raised concerns about genetically modified, or GMO, foods and have accused agribusiness of pursuing profit without concern for potential environmental hazards and human health.
'We see very clear policies from the Argentine government on biotechnology and very clear policies to protect intellectual property,' Vaquero said.
'These two ingredients, plus the expected increase in production, are the main factors explaining why Monsanto plans to keep investing heavily in Argentina,' he added.
His comments suggest Monsanto has put behind it a years-long legal battle with Argentina over royalties for the company's Roundup Ready 2 Yield soy variety, which was never patented in the country but became ubiquitous.
Argentina's business climate is plagued by inflation, clocked by private economists at over 20 percent per year. But with global food demand expected by the United Nations to double by 2050, Argentina is sure to remain a major supplier.
Fernandez wants to keep Argentina's farm sector humming as its economy, which has boomed over most of the last nine years, slows sharply.
NEW CORN EXPORT POLICY
Her government bowed to pressure from growers to scrap its incremental corn and wheat export quota scheme in favor of unveiling the full exportable amount early each season. The new policy aims to improve farm revenue by increasing competition among buyers.
In July, Argentina pre-approved the export of 15 million tonnes of 2012/13 corn. Growers applauded the one-shot allocation as a possible step toward dropping export limits altogether.
'This was a very smart move by the government in order to promote corn planting,' Vaquero said. 'Farmers need predictability on the sale of their corn. The announcement of 15 million tonnes in exports gave them that predictability.'
(Editing by Hilary Burke and Dale Hudson)
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