Argentine Economic Collapse Benefits Farmers

BUENOS AIRES - May 1/03 - STAT -- Argentina's economic collapse last year resulted in good conditions for wheat and grain farmers to profit greatly, the USDA reported.

In 2002, the government stopped a one to one equivalence with the US dollar, the credit system collapsed, and bank accounts were frozen. The currency was switched to the peso, which subsequently suffered a 70% devaluation. These conditions proved very favourable for farmers, as tradable commodities were suddenly very profitable.

A significant production increase is anticipated for 2003/04 as the crop bounces back from the previous year's dismal yield of 12.3 MMT (million metric tons). Economic instability was at its peak in the months just prior to planting. Because many input suppliers had exported their stocks in the chaos of early 2002, adequate inputs for wheat were not available, despite strong demand from farmers. Planted area is steady at 6 million hectares, and the USDA is estimating this year's production to be 14.5 MMT.

Harvested area of corn for 2002/03 reached the same level as the previous year at 2.6 million hectares. Production, however, is expected to increase significantly from 14.7 to 15.5 million tons. The combination of excellent weather conditions and the availability of inputs at their time of application generated an increase of up to 30% in yields.

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