Argentinean soybean processing capability is expected to match that of the United States by 2007, according to a report by Producir Conservando Foundation, one of the top agriculture assessment companies in Argentina.
The country, already a world leader in soybean oil exports, is expected to increase its daily processing capabilities to 154,175 tons by the end of next year, according to the foundation's analysis. This would represent an increase of 34 percent from present levels of around 115,000 tons per day.
According to Gustavo Lopez, the report's author, the objective of the analysis is to compare Argentinean soybean oil producing capability to both America and Brazil. Its interest for Americans and Brazilians is that it shows that a new and powerful competitor is back in the game, and it is aiming to compete with these two countries' most strategic activities in agriculture.
The analysis, partially based on data obtained from the Argentinean commodities broker J.J. Hinrichsen, estimates that American daily soybean processing capability should reach 159,000 tons in two years, and Brazil should reach about 144,000 tons by the end of 2007.
Brazil and America are the worldwide leaders in soybean production, and are also huge markets for its derivatives, which means that much of what's produced is consumed within their borders.
“Argentina has innumerous advantages” to ramp up its soybean planting, states the report. “Among them, lower planting costs, low inputs costs, such as fertilizers, herbicides and fungicides, fewer climatic barriers, a very fertile soil, and very little problem with Asian soybean rust.”
Another factor important to the growth of Argentinean soybean processing is that its internal use of soybean oil and its derivatives is minimal compared to the United States and Brazil. This allows Argentina to export much more than its two major international competitors.
While the rest of Argentina industrial sectors are enduring severe economic woes, agriculture has been somehow spared from the worst. Now that perspectives are brighter, the country is starting to regain ground, ramping up production and laying out aggressive market strategies.
More than 95 percent of Argentina's cereal production — processed or not — is exported. And Argentinean crops are situated near ports and industry clusters, which greatly reduces transport and storage. This is what has been the ace up Argentina's sleeve, and what has allowed the country to set highly competitive prices for its soybeans products.
“We clearly see a competitive edge for Argentina over the United States and Brazil, both in the actual soybean producing and in its manufacturing and exporting processes,” states the report.
Thanks to recent investments, Argentina has some of the most modern cereal processing industries worldwide, according to the study. In fact, the average processing capability of Argentinean plants are expected to rise to around 3,280 tons per day by 2007, compared to 2,271 tons daily for the United States and 1,235 tons daily for Brazil.
The report noted that it is imperative that government and private sectors start to invest more in infrastructure, in order to guarantee the production growth level. Should these investments never take place, all efforts in elevating productivity in the field would be in vain.
Argentinean reports like this one have been known to raise eyebrows among non-Argentinean readers, as the authors' national pride sometimes gets in the way of true economic conditions. Still, they must be taken seriously. Even battered by almost a decade of economic crisis, Argentina has a tradition in overcoming difficulties, especially in agriculture, the most important economic sector in the country, along with livestock production.
Jose Sergio Osse is a Brazilian ag journalist.