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March 25, 2014

Argentine Government's Goal is to Double Irrigated Acreage

After suffering several episodes of drought over the last few years, the Argentine government announced last week that they will invest US$ 7 billion in order to double the number of irrigated hectares of row crops in Argentina.

Currently, there are 2.1 million hectares of irrigated production in Argentina which represents 6% of the row crop acreage in the country. By the year 2030, the goal is to increase that to 4.3 million hectares under irrigation or 12.5% of the row crop acreage.

Approximately US$ 3.6 billion will be invested in the core production regions of Argentina and another US$ 3.2 billion in the northern provinces which are normally more impacted by dry weather. The productivity of the 2.2 million additional irrigated hectares is expected to increase by 50%.

Argentina is the largest exporter of soybean oil and soybean meal and the third largest exporter of corn, but a series of disappointing crops in recent years has led the government to increase their investments in irrigation. The Argentine economy is currently laboring under high inflation and inadequate tax revenues and it remains to be seen if the government will have the financial wherewithal to follow through on their commitments.

A long period of hot and dry weather in central Argentina this past December and January negatively impacted the earlier planted corn that was pollinating at the time. Just a few years ago in 2008/09, a severe drought drastically reduced the production of soybeans and corn, which are the two principal crops in the country.

Currently, farmers in Argentina are starting to harvest their 2013/14 crops with approximately 7-10% of the corn harvested and 2-3% of the soybeans harvested.