Required Report - public distribution

**Date:** 3/10/2005

**GAIN Report Number:** AR5008

AR5008

**Argentina**

**Grain and Feed**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Bob Hoff

U.S. Embassy

**Prepared by:**

Kari Rojas

**Report Highlights:**

Wheat production for Marketing Year (MY) 2005/06 (December - November)
is forecast at 15.5 million metric tons (MMT) on 6.25 million hectares
(has.), down 3 percent from the previous year. Corn production in
MY2005/06 is forecast down slightly at 17.5 MMT on 2.65 million has..
The wheat harvest for MY2004/05 ended in late January with 16 MMT
collected. The MY2004/05 corn harvest is expected to reach a record
level, and is forecast at 19.5 MMT, with excellent quality.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Buenos Aires \[AR1\]

\[AR\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Wheat 3](#wheat)

[Corn 4](#corn)

[Barley 4](#barley)

[Rice 5](#rice)

[Sorghum 5](#sorghum)

[Transportation 5](#transportation)

[Storage Infrastructure 6](#storage-infrastructure)

[Consumption 6](#consumption)

[Wheat 6](#wheat-1)

[Corn 7](#corn-1)

[Barley 7](#barley-1)

[Rice 7](#rice-1)

[Sorghum 7](#sorghum-1)

[Trade 8](#trade)

[Wheat 8](#wheat-2)

[Corn 8](#corn-2)

[Barley 9](#barley-2)

[Rice 9](#rice-2)

[Sorghum 9](#sorghum-2)

[Stocks 10](#stocks)

[Storage 10](#storage)

[Fixed Storage 12](#fixed-storage)

[Prices 12](#prices)

[Policy 12](#policy)

[Export Taxes 13](#export-taxes)

# Executive Summary

Although commodity prices fell over the past year, the Argentine
agricultural sector continues strong. Faced with several limitations,
such as an inadequate transportation system, an inefficient wheat
grading system, and agricultural export taxes, production, exports, and
domestic consumption continue to increase.

While production for the 2005/06 marketing year (MY) is not expected to
reach this year's near-record levels, corn and wheat area and production
are forecast up slightly from two years ago at 17.5 and 15.5 million
metric tons (MMT), respectively.

The preliminary estimates for MY2004/05 show wheat and corn production
this year are up 22 and 30 percent, respectively, from the previous
year, due to excellent weather throughout the growing season. Wheat
production for MY2004/05 is estimated at 16 MMT. Corn production in
MY2004/05 is estimated at 19.5 MMT. Additionally, wheat area in the
central Argentine production area increased slightly due to an increase
in wheat/soybean double cropping. This area is expected to increase
slightly again next year, as producers look for ways to generate more
income on the same amount of land.

Barley harvested area is forecast stable at 275,000 has., but yields are
expected to return to normal, resulting in a slight reduction in
production to 850,000 MT. The malting industry is expected to absorb
much of the overproduction of the past few years, due to increasing
demand for malt beverages.

Argentina will continue to be a key player in international grains
markets due to its large exportable supply and relatively low price.
Post forecasts that wheat exports will finish this year up about 25
percent over last year, at 12 MMT. Corn exports are forecast up as well,
28 percent from last year, at 14 MMT.

The Argentine producer is resilient and innovative. While some producers
are divided along political lines, most strive for the knowledge and
technical assistance found in non-political organizations such as
AAPRESID (Argentine No-Till Organization) and AACREA (Argentine
Association of Regional Consortiums of Agricultural Experimentation).
These groups rely on the experience of others to teach new conservation
and agricultural practices and techniques. Producers try innovative ways
to increase their income on the same amount of land such as,
corn/soybean double cropping, and corn double cropping. This drive to
succeed has helped producers through the past year of falling prices and
increased costs and empowered them with the confidence to persevere.

# Production

## Wheat

Post forecasts wheat production for next marketing year (MY) at 15.5 MMT
on 6.25 million has.. This forecast is based on higher than normal
yields (2.48 MT/ha) and increased area due to very good wheat/ second
soybean results in the central Argentine production area.

Post has not changed its MY 2004/05 production estimate of 16 MMT on 6.1
million has. in line with official Argentine statistics from the
Secretariat of Agriculture (SAGPyA). Yields were higher than the 5-year
average throughout the country, averaging 2.6 MT/ha.

Wheat yields throughout the agriculture areas vary greatly, ranging from
1.5 MT/has., in marginal areas (Northern Santa Fe, Northern Cordoba, La
Pampa), to over 4.0 MT/has. in the wheat belt (Southern Buenos Aires).
Over half of total wheat production is found in the southern Buenos
Aires province.

Surprisingly, during MY2004/05, wheat producers in Northern Buenos
Aires, Southern Santa Fe, and Southern Cordoba (Venado Tuerto, Marcos
Juarez, Junin, Pergamino, Bragado, Casilda, Cañada de Gomez) had yields
of approximately 3.3 MT/has., well above national five and ten-year
averages. In this area, in the face of falling soybean prices, producers
can spread out their risk by planting wheat followed by second crop soy,
rather than concentrating on only first crop soybeans. This trend is
likely to continue next year, contributing to the increased wheat area
and production.

## Corn

Post forecasts MY 2005/06 corn production at 17.5 MMT on 2.65 million
harvested has.. Harvested area remains unchanged from the previous year,
but production is forecast to decrease as yields return to normal.
Planted acreage may increase, although, corn area harvested for grain
will most likely remain unchanged due to low grain prices and higher
milk and beef prices (see Consumption section).

Post increased MY2004/05 corn production and area estimates to 19.5 MMT
and 2.65 million has., respectively. USDA field travel during February
confirmed reports that the corn crop this year is excellent and
historical yields in many areas are expected. While some small areas
experienced drought followed by heavy rains and flash drying, corn in
the main producing areas look excellent.

Harvest for grain began in the northern areas of the country at the end
of February. As of February 26, 2005, less than 5 percent of total corn
area was harvested, compared to around 9 percent harvested at the same
date last year.

## Barley

Post forecasts barley production for MY2005/06 to fall slightly from the
higher levels seen in the past two years. Assuming normal yields of 2.4
MT/ha, production is forecast at 850,000 MT on 275,000 has..

Post estimates MY2004/05 production at 890,000 MT on 272,000 has., based
on preliminary harvest statistics from January 2005. Although harvested
area and production fell 20 percent from record production of MY2003/04,
yields throughout the producing areas were excellent, averaging 3.3
MT/ha.

The sharply increased production in MY2003/04 occurred as a result of a
shortfall in production in 2001 and 2002. While barley is normally
produced under contract, producers without contracts can sell their
production to the malting industry, usually at excellent prices, when
there is an undersupply of production. In MY2002/03, barley production
reached only 543,420 MT, causing a decrease in stocks to cover demand.
In MY2003/04, producers, reacting to the underproduction of the previous
year, planted without contracts with the hope that they would be able to
sell their production at harvest, due to high demand by the malting
industry. However, the increase in area (some contracted, others not),
combined with higher than average yields led to a sharply increased
production in MY2003/04 of 1 MMT. Producers without contracts had no
choice but to sell their production at lower than desirable prices.

Due to increased production over the past two years, malters are
expected to manage their contracts more closely, and control the
distribution of seeds and other inputs to rein in future production.

While production has recovered from levels in 2001 and 2002, it has been
at the expense of quality. In MY2003/04, protein levels averaged 9.2
percent. This year (MY2004/05) protein levels are near 9 percent.
Protein levels lower than 9 percent are a concern to malters, who demand
protein levels between 10 -- 11 percent with some tolerance up to 12
percent. With lower than average protein levels, malters are forced to
be more particular when accepting grains to assure they have adequate
supplies to mix grains to reach an average protein level of 10 -- 11
percent.

In order for the grain to be accepted by the malters, it must meet the
very demanding industry standards, which are fixed in the contracts. The
contract also establishes planted area, purchase price, delivery
conditions, transportation expenses, and marketing expenses. If contract
conditions are not met, the purchaser will not accept the grain. One
condition that will lower the quality of the grain significantly is the
sprouting ability of the grain. During maturation, premature sprouting
will occur under certain temperature and humidity conditions, causing
the barley to lose its industrial qualities and forcing it to be used as
forage at a lower price.

## 

## Rice

Post forecasts MY2005/06 milled rice production stable at 645,000 MT on
170,000 has.. Due to increased pressure from the expansion of area
planted to soybean, area planted to rice has tended to move further out
of the Entre Rios area into Corrientes and Missiones.

Post estimates MY2004/05 production at 637,000 MT on 160,000 has..
Harvest began in the northern delegation of Parana, Entre Rios the week
of March 3, 2005. Total planted area in Parana is 39,800 has. and
average yields are reported to be 6.6 MT/ha.

Post estimates final MY2003/04 milled rice production at 742,000 MT on
174,000 has.. Yields were above normal throughout much of the rice
producing area which lead to a 39-percent increase in production from MY
2002/03. Estimates for rough rice production from SAGPyA and private
analysts range from 1 -- 1.1 MMT.

Over the past several years, the Argentine rice sector has experienced a
consolidation of productive area and an increase in large producers
(over 500 has.), with access to irrigation either rainfall or well. This
consolidation led to increased efficiency, lower costs (by decreasing
labor costs), and ultimately higher yields overall.

## 

## Sorghum

Post forecasts sorghum production for MY2005/06 at 2.7 MMT on 500,000
has.. Sorghum area harvested for grain will vary according to the
relative price between sorghum and corn. The two grains are
interchangeable in terms of grain, as well as forage for dairy cattle.

Post estimates sorghum production for MY2004/05 at 2.8 MMT on 550,000
has.. Area is up this year due to an increase in sorghum plantings in
marginal areas. Yields in the principle production areas of Cordoba,
Santa Fe, and Entre Rios are expected to be higher than the national
average.

## Transportation 

Transportation of grains is a major limiting factor to production. Many
production decisions are based on the location of producers and
elevators from ports and the availability of alternate types of
transportation. Historically, only 15 percent of production is
transported by train, and the remaining production relies on truck
transport. In very few instances, transport is on waterways.

The following is a breakdown of transportation costs:

  -------------------- --------------------------------------------------
  Mode                 Cost (US\$) per MT/KM

  Truck                .05-.06

  Train                .02 -.025

  Water                .008 - .009
  -------------------- --------------------------------------------------

## 

Analyses show that, in terms of corn production, it is more profitable
for producers located more than 300 -- 400 kilometers from port to
convert their corn production into meat or milk, by feeding directly to
cattle, instead of exporting.

Additionally, up-river ports around the Rosario area in Santa Fe
province are unable to fully load large sea vessels due to inadequate
dredging. Currently, the main channel of the Rio de la Plata is dredged
to 32 feet. Vessels must be partially loaded in the Rosario ports and
then topped off either in Bahia Blanca, Argentina, or Paranagua, Brazil.
This additional stop dramatically increases transportation costs from
Argentina. Some analysts calculate that every hour a vessel must wait to
finish loading at other ports can cost upwards of US\$1,800.

The cost for dredging the main channel to an optimal 42 feet is great.
Calculations show that to reach a less optimal 36-foot dredge, over 40
million cubic meters of earth must be moved. The cost of moving 1 cubic
meter of earth is approximately US\$2.50. Although it is a major
limitation to the comptetiveness of Argentine agriculture, it is
unlikely this project will be undertaken in the near future due to the
cost.

## Storage Infrastructure 

As soybean production began to take off, most elevators and silo plants
began to think exclusively in the soybean trade and built large silos
and warehouses capable of handling large volumes, an infrastructure that
makes it difficult to separate and classify grains. Producers are very
interested in capturing any added value that they can and have begun to
incorporate more on farm storage in the form of silo bags to segregate
their production in order to receive bonuses for higher protein level,
etc. Many producers will sample their field a week or so before harvest
in order to classify and segregate wheat at the time of harvest
according to protein level and variety.

# Consumption

## Wheat

Post forecasts that MY2005/06 domestic wheat consumption will be flat at
4.5 MMT. An increase in domestic consumption is not probable as demand
for wheat products (bread, cookies, pastas) is relatively inelastic. As
income changes, the Argentine consumer does not change his overall
consumption of wheat products, although the composition of consumption
may change; i.e. he may substitute pasta for bread or vice versa.

Post estimates that MY2004/05 domestic wheat consumption will remain at
the level of MY2003/04 - 4.5 MMT.

According to SAGPyA statistics, 5.148 million tons of wheat was milled
for flour and feed in MY 2003/04. Durum wheat accounted for close to
three percent of total wheat milled. Wheat milled for feed (durum and
common) in MY 2003/04 totaled approximately 3,253 MT, down slightly from
4,300 MT in MY 2002/03.

Of the total wheat milled in MY2003/04, 672,000 MT of flour, pasta, and
pre-mix (wheat equivalent) was exported. Total domestic consumption for
MY 2003/2004 is estimated at 4.5 million MT.

## Corn

Feed corn grown in Argentina is destined to mostly milk and poultry
production. Poultry production is concentrated in the province of Entre
Rios. This area accounts for 10 percent of total corn production, or 1.5
MMT. This production, however, only satisfies 50 percent of local feed
demand. An additional 1.5 MMT of grain must be imported from other areas
of the country to satisfy the demand. Overall, the poultry and egg
industries demand large amounts of corn; the feed rations for these
industries are normally 60 -- 70 percent corn. Poultry production in
2005 is forecast to increase 10 percent.

At current prices it is excellent business to convert cheap corn into
high-priced milk. Total milk production is slated to increase
approximately 6 percent in 2005.

Approximately 25 percent of the Argentine cattle herd is finished on
feedlots with balanced feed rations, usually containing 50 percent corn.
It is common practice that a large part of the remaining 75 percent of
the cattle herd will receive some form of balanced rations in the field.
The Argentine beef herd is expected to increase in 2005 to 49.2 million
head (See Attache Livestock Report AR5005), which means an increase in
feed consumption by not only large producers, but smaller ranchers, as
well, especially in the finishing of the last 80 -- 100 kilograms.

Additionally, as stated above, the farther corn production is from major
ports, the more likely it is that producers will feed the grain to their
livestock. Therefore, producers in the provinces of Salta, Chaco,
Corrientes, Tucuman, San Luis, and parts of Cordoba, will opt to consume
corn on the farm instead of paying high transportation costs.

## Barley

Post forecasts MY2005/06 barley domestic consumption at 700,000 MT due
to increased demand in the malting industry.

Domestic consumption of barley is exclusively for the beer industry.
There are three major malters in Argentina: Quilmes, Pampa, and Cargill.
Cargill produces mainly for the export market, while the other two
produce malt for the local beer industry and export.

As per capita beer consumption increases, domestic consumption of barley
will increase as well. Currently per capita beer consumption is 36
liter/year.

## Rice

Post forecasts domestic rice consumption for MY2005/06 up slightly from
previous year at 285,000 MT due to slight population increases. Rice is
not a staple product for the Argentine consumer and is not well
incorporated into the Argentine diet. Per capita rice consumption in
Argentina is very stable at approximately 7 -8 kilos (rough basis).

## Sorghum

Post forecasts MY2005/06 sorghum domestic consumption at 2.5 MMT, up
slightly from the previous year. Similar to corn consumption, most
sorghum feed is destined to the dairy industry. At current prices, it is
good business for producers to convert cheap feed grains to more
expensive beef and dairy. This can be done by either feeding livestock
balanced rations made mainly from corn, which will be substituted by
sorghum if the prices are right, or by chopping sorghum for silage (see
Storage section below). Argentine dairy production is expected increase
6 percent in the coming year.

Post estimates MY2004/05 sorghum domestic consumption at 2.4 MMT.

# Trade

## Wheat

##  

Post forecasts MY2005/06 wheat and wheat product exports at 11 MMT due
to the price competitiveness of Argentine wheat. Argentina will continue
to be an international player in the wheat trade due to the low prices,
but not necessarily due to the quality of its wheat. While the quality
of Argentine wheat in general is good, the lack of a well-developed
classification system has led producers to concentrate on quantity
instead of quality.

Post estimates MY2004/05 exports up from the previous year to 12 MMT.
According to customs data collected by private sources, from December 1,
2004 through March 6, 2005, Argentine wheat and wheat product exports
totaled approximately 6.2 MMT, compared to 2.6 MMT for the same period
last year. See the year-to-date comparison below.

![](media/image2.wmf){width="3.2493055555555554in"
height="1.729861111111111in"}

MY2003/04 wheat and wheat product exports are estimated at 9.56 MMT, as
shown in the table below.

![](media/image3.wmf)

## Corn

Post forecasts MY2006/07 corn exports at 12 MMT, down slightly from the
previous year due to a forecast decrease in production, and an increase
in demand for feed due to an expansion of livestock, dairy, and poultry
production.

Post estimates MY2005/06 exports at 14 MMT. At the end of February, port
reports show that over the following three weeks, 550,000 MT of corn
would be loaded in the up-river ports. Total forecast loading during
this period, in all ports in the country, is 600,000 MT. Export pace is
forecast to continue as domestic demand for export quality grain
decreases.

Export commitments for the new crop have also picked up speed over the
past few weeks due to the large exportable supply forecast for the new
crop and the availability of cheap corn. It may be difficult, however,
for Argentine corn to continue to win favor in the international markets
due to the global oversupply of corn. At the end of February 2005 there
was still over 9 MMT left to sell, compared to the same time last year
when all but 5.84 MMT was already sold.

Post estimates MY2003/04 corn exports at 10.9 MMT. Preliminary end of
year data show corn exports between March 2004 and February 2005 were
10.9 MMT. Additionally, popcorn exports were 124,000 MT, which is not
included in Post's corn export estimate.

Corn for export depends heavily on the location of producers and
elevators to ports, as transportation costs are high. Normally,
production for export is centered 300-400 kilometers from ports; farther
distances are not as profitable.

## Barley 

Post forecasts MY2005/06 barley exports steady at 200,000 MT. Barley
exports are normally calculated as a residual, or in other words, barley
not consumed by the local malting industry will be exported.

In MY 2003/04, barley exports were 201,356 MT. Over 70 percent of the
exports went to Brazil. Other destinations included United States,
Uruguay, and Chile. Malt exports during the same period totaled 247,130
MT. Over 85 percent of the exports went to Brazil. Other destinations
included Bolivia, Uruguay, Paraguay, Chile, and Venezuela.

## Rice

Post forecasts MY2005/06 total rice exports up from previous year to
350,000 MT due to stable demand, a slight increase in production, and
increased stocks.

Post estimates MY2004/05 milled rice exports at 300,000 MT. Preliminary
data from private sources show MY exports through March 6, 2005 total
275,051 MT.

Official trade statistics for MY2003/04 show rice exports (milled rice
equivalents) totaling 192,010 MT. Other private sources, however,
calculate exports between 200,000 and 295,000 MT. The discrepancy in
data between the different sources may be explained by trade that is not
captured in official channels due to the proximity of the exporters to
international borders (Brazil, Paraguay, Uruguay). Due to relatively
low, and stable, domestic consumption and the tendency for low stocks,
the likelihood of higher than reported exports is probable.

## Sorghum

Post forecasts MY2005/06 sorghum exports at 400,000 MT, up slightly from
previous year. As with corn exports, sorghum exports will depend heavily
on transportation costs and distance from port (see Transportation
section).

Post estimates MY2004/05 exports at 300,000 MT. This crop's export sales
pace is slow, compared to MY2003/04. As of March 9, 2005, reported sales
were only 47,500 MT, compared to prior years accumulated sales of
130,200 MT for the same date.

# Stocks

The increase in on-farm storage, mainly in silo bags, complicates
calculations of grain stocks. Prior to this increase, stock calculations
were made based on official surveys of storage facilities. While these
official data are still available, they do not provide a realistic
calculation of stocks due to the unknown factor of on-farm storage,
which is not included in the survey. What is certain about on-farm
storage is that there has been an increase in silo bag sales of 25 -- 30
percent over the past year. Last year approximately 80,000 bags were
sold. This year sales of 100,000 bags are expected. Additionally, sales
of 5-6,000 sillage bags are expected. With capacity of between 150-200
MT/each, there may be an additional 15-20 MMT of storage in the
countryside (see Storage section, below).

## 

## Storage

Storage capacity is not a limiting factor in Argentina due to the
increased use of silo bags for on farm storage. The tendency of
producers to use on-farm storage of this type increased rapidly over the
past few years after the peso devaluation and the accompanying financial
crisis.

Prior to the financial crisis of 2001/02, the agricultural sector was
heavily indebted and many producers were forced to turn over their
production to elevators and exporters immediately after harvest in order
to cancel debts incurred during the growing season (seeds, fertilizers,
etc). After the devaluation, producers found themselves in a good
financial position due to a reduction in debt (loans were reduced by
two-thirds, due to the 'depegging' of the 1 Argentine Peso to the 1 U.S.
Dollar) and an increase in commodity prices. Many producers paid off
their loans and found that their operations were more liquid than before
the devaluation, which allowed them to invest in on farm storage (silo
bags, or in some cases, fixed storage). Producers now have the luxury of
holding on to their production after harvest, and selling when prices
reach attractive levels. Additionally, many producers experience the
added security of being able to physically see and touch their
production on their own farms.

The advantages of using silo bags are numerous. First, producers can
store grains on the farm at a very low cost. Additionally, because a
producer does not have to coordinate with local transportation to carry
his harvest to off-farm storage, he can begin to harvest whenever he
wants, according to the stage of development of the crop. Producers also
have the ability to separate grains according to qualities and to cash
in on bonuses for higher proteins, etc. Finally, producers can store
grains in a more humid environment than found in conventional silos,
without using insecticides.

The basic principle of silo bags is to keep dry grains in a controlled
atmosphere. By maintaining low oxygen (O2) and a high concentration of
carbon dioxide (CO2), funguses and insects are controlled, and grain
temperatures are stabilized. Grain-filled silo bags can last up to two
seasons in high temperature regions and up to three years in lower
temperature areas.

Silo bags come in a variety of sizes and widths as shown in the chart
below. The thickness of the bags used for grains range between 180
microns (in the case of 5 foot diameter) and 250 microns (in the case of
9 foot diameters). There are three layers that make up the bags; the two
inside layers are black, the outside, and thickest, layer is white.

In addition to the purchase of the silo bags, producers must also pay
for the filling of the bags, which is done with special machines, called
'embutidores' (directly translated as 'stuffers'). Additionally, special
extractors must be used to remove the grain from the bags at the time of
sale.

It is not common for producers to own their own equipment for filling
silo bags. Therefore, most rely on contractors to complete the harvest,
as well as filing the silo bags. This phenomenon is very different than
in other parts of the world. Contract harvesters, normally, begin in the
north of the country and work their way south as the harvest progresses.
These specialized workers are usually contracted by word of mouth from
two months, and sometimes up to one year, before the harvest begins.
They are normally paid by hectare harvested, although some may be paid
by quantity of grain harvested.

+---------+---+---------------------------+------------------------+---+---+---+
| ####### |   |                           |                        |   |   |   |
|  Grain  |   |                           |                        |   |   |   |
| Storage |   |                           |                        |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+
| D       |   | Length                    | Capacity               |   |   |   |
| iameter |   |                           |                        |   |   |   |
|         |   |                           | (metric tons)          |   |   |   |
| (Feet)  |   |                           |                        |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+
| 5       |   | 200 ft                    | 55 / 60                |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+
| 6       |   | 200 ft                    | 90 / 100               |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+
| 9       |   | 200 ft                    | 200 / 210              |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+
| 9       |   | 250 ft                    | 250 / 260              |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+
|         |   |                           |                        |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+
|         |   |                           |                        |   |   |   |
+---------+---+---------------------------+------------------------+---+---+---+

In addition to silo bags for grains, they are also used for storing
silage. These bags range from 7 to 10 feet in diameter and 216 -- 228
microns thick. The capacity of these bags ranges from 130 -- 250 MT.
This process is an economic and efficient method to preserve forage and
pasture based on an anaerobic fermentation process that maintains
quality for long periods of time. Optimal silage conditions are obtained
when moisture is between 58 -- 68 percent and plants are chopped to 8-12
mm.

Most producers will harvest corn for silage between the milk and dough
stages of development. Larger producers will plan ahead of time for
their silage needs according to the number of head of cattle they need
to feed, or according to size of their dairy production. If they meet
their silage needs before completing all of the area they planned for,
they will most probably leave the remaining corn in the field and
harvest for grain at a later date. Thus forecasting in any given year
the amount of corn planted for grain and for silage becomes a quite
difficult exercise.

![](media/image4.jpeg){width="3.0833333333333335in"
height="2.5104166666666665in"}

![](media/image5.jpeg){width="2.8854166666666665in"
height="2.4791666666666665in"}

Filling of a silo bag.

## Fixed Storage

As of January 31, 2005, total installed fixed capacity for all grains
was just over 44 MMT (calculated on wheat basis of 80 falling weight).
Total used capacity was only 29 percent, or 12.8 MMT.

The following chart details the amount and location of the various
storage facilities throughout the country, as of January 31, 2005.

![](media/image6.wmf){width="6.5in" height="2.2493055555555554in"}

Source: ONCAA/SAGPyA/Ministry of Economy, Argentina

# Prices

Commodity prices in Argentina are set at the different Grains Exchanges
throughout the country. There are three principal exchanges that set
prices: Buenos Aires, Rosario, and Bahia Blanca. The spot prices set by
these markets are usually a reflection of CBOT prices, less a
percentage, relatively close to the export tax for the product.
Curiously, producers are paid this spot price for their production (less
transportation), regardless of the final destination of their product
(local or export market).

# Policy

## Export Taxes 

The GOA collects export taxes on grains and their sub-products depending
on their level of processing. Normal rates range from 5 -- 20 percent.
![](media/image7.wmf)

![](media/image8.wmf)

![](media/image9.wmf)

![](media/image10.wmf)![](media/image11.wmf){width="6.91875in"
height="3.0708333333333333in"}