Argentina is the second largest country of Latin America, just after Brazil, at 2.78 million km2, and the fourth most populous with a population of 44 million people. With a Gross Domestic Product (GDP) of approximately US$400 billion, Argentina is one of the largest economies in Latin America.

Comprising almost the entire southern half of South America, Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Although one of the world's wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt, and capital flight.

The COVID-19 pandemic, on top of Argentina’s two-year economic recession (2018-2019), has compounded the country’s critical economic environment. Argentina’s GDP declined from $445.5 billion (2019) to $383.1 billion in 2020.

Argentina has vast natural resources in energy and agriculture. Within its 2.8 million square kilometers of territory, Argentina is endowed with extraordinary fertile lands, gas and lithium reserves, and has great potential for renewable energy. The country has the second-largest shale gas and fourth-largest shale oil reserves in the world as well as abundant solar and wind energy resources.

It is a leading food producer with large-scale agricultural and livestock industries. Argentina's main crops include soybeans, indigenous cattle meat, wheat, maize, whole fresh cow milk, grapes, indigenous chicken meat, sunflower seed, sugar cane and apples.

There has been significant growth in crop production, particularly cereals and oilseeds, over the last 30 years in Argentina. This growth has been driven not only by improvements in productivity for the main crops (i.e. soybeans, maize and wheat) but also by an increase in land devoted to cereals.

In Argentina, nearly all field crop production and most livestock activity occur in the northeastern third of the country. This is a humid, warm temperate zone with fertile soils. This rich agricultural zone is centered on the fertile Pampas—an area of slightly more than 50 million hectares—but extends into Argentina’s northern tier of provinces that share a warmer, semitropical climate with the bordering regions of Bolivia, Paraguay, Brazil, and Uruguay.

Argentina is a large net exporter of agricultural products such as soybean, wheat, corn, sunflower, sorghum, rice, beef and milk. Despite public policies hampering the sector for many years, agriculture is in general well developed, with high levels of productivity. Agricultural production has grown at an annual rate of 2.8% in the last two decades, driven originally by high world grain prices and by technological innovation as prices have fallen over the past years. Unfavorable public policies, particularly export taxes, are likely to have pushed the private sector to innovate in order to remain competitive and benefit from Argentina’s comparative advantage in international markets. The most important technological development include: improved seeds, no-till farming, increased use of pesticides and crop rotations (soybean and cereals).

Innovation in the organization of production has also been rapid and massive. New contract farming schemes have flourished, many farming activities have been outsourced to large service providers, and seeding pools bringing together assets from many farmers have been created. Private sector initiatives and organizations have played a leading role in innovation and increasing productivity.

Argentina’s production growth and innovation in the last decades has been very much focused on a single commodity, soybean. Driven by growing world demand, high prices and policies, this commodity has increased its share in Argentina’s production and export portfolio. Argentina is the world's leading exporter of processed soybeans. As for 2021/22 season, The Buenos Aires exchange expects 44 million tonnes soybean production.

RECORD WHEAT PRODUCTION 

Wheat is also one of the main commodities exported by the South American country. Argentina is the world's seventh-largest wheat exporter. Argentina's 2021/22 wheat production is expected at a record 20.3 million tonnes, the Buenos Aires Grains Exchange said, citing better than expected yields as the reason for increasing its previous 19.8 million tonne estimate. And US Department of Agriculture (USDA) wheat production forecast for Argentina is 20 million tonnes. The previous wheat harvest record in grains powerhouse Argentina was 19 million tonnes in the 2018/19 season.

USDA projects wheat exports for MY 2021-2022 at 13.5 million tons, including roughly 700-800,000 tons of wheat flour (in its wheat equivalent). This would be the second-highest volume on record. The core of the harvest is normally concentrated in November-December and to date, practically 9 million tons of the crop was already purchased by exporters and have export declarations. This is about double of the volume purchased by exporters at this time a year ago.

Brazil is expected to buy approximately 5.8-6.0 million tons of wheat followed by purchases from African countries and other Latin American countries such as Chile and Peru. Exports to Southeast Asia are expected to be significantly smaller in MY 2021-2022 than the past two seasons because Australia is projected to recover its production and thus exports to this region.

CORN

As for 2021/22 corn, USDA raised its harvest estimate to 54.5 million tons. And the Buenos Aires exchange expects a record corn harvest of 57 million tonnes. Despite higher production costs, corn has been showing since the early planning stages of the MY 2021-2022 crop season to be the best and most profitable alternative in most agricultural areas of Argentina. Although production costs of corn are way higher than soybeans, many farmers were able to purchase some inputs in advance at lower prices. Local farmers are also in a good financial situation after a profitable MY 2020-2021 which resulted in good production levels at high commodity prices.

Argentina is the third-largest exporter of corn, behind the U.S. and Brazil. Corn exports for MY 2021-2022 are forecast at a record 40 million tons. Destinations are projected to be similar to those in MY 2020-2021, except for exports to Brazil which are expected to be significantly lower with the production of their new crop.

Domestic consumption of corn in MY 2021-2022 is forecast at 14 million tons. Consumption is expected to increase as the different livestock sectors are forecast to continue to recover production as the country slowly comes back from the significant economic downfall of 2020.

EXPORT RESTRICTIONS

In Argentina, export restrictions and taxes on soybean, sunflower, wheat and corn have depressed producer prices for most of the last two decades. Export taxes were typically lower for processed products, while quantitative restrictions and export licences have particularly affected wheat and beef. Export restrictions have proved not to be an effective and sustainable instrument for reducing food inflation, although they did generate fiscal revenue, notably in years of high food prices on world markets. In December 2021, Argentina announced plans to cap corn and wheat exports in the next marketing year as part of efforts to quell domestic inflation. The Argentine government said that corn exports would be limited to 41.6 million tonnes while wheat would be limited to 12.5 million tonnes.

On the barley front, USDA projects production for MY 2021-2022 at 4.8 million tons. Barley exports for MY 2021-2022 remain at 3.5 million tons, the third-highest volume on record. Domestic consumption is projected at 1.55 million tons. Malting companies are seeing stronger demand from the domestic market and other regional markets, as many countries return to a more normal pace after the vast vaccination campaigns have come a long way to normalizing life.