Will Argentina Export More Corn?

Government intervention

But government intervention has been the bane of Argentina’s corn growers, particularly since 2006, when the Argentine government took a more direct role in grain markets.

Besides a corn-export tax of 20%, corn also comes under the government’s grain-export licensing regime,administered by the national bureau of agricultural trade control, ONCCA, with the aim of keeping domestic prices low. Each November, ONCCA determines the minimum volumes necessary for domestic consumption. The excess can then be exported subject to the granting of a licence. 

However, the licensing regime has not operated smoothly. According to Hughes, “the allocation of licenses was often arbitrary, and their issue was often suspended, when the government felt prices were rising in the domestic market.”

Stung by criticism and a decline in corn acreage, the system was operated in a better fashion in 2010. But despite this, there is a general lack of faith in it. “Many fear that the export market could be closed at will, leaving farmers unable to sell their corn,” says Martín Fraguío, executive director of Maizar, the Argentine corn chamber.

“If we didn't have government intervention in the corn market and export taxes, the area devoted to corn production would be at least 30% higher,” says Santiago del Solar, CEO of agricultural group Estancias Lauquen and non-executive president of Maizar.