Argentina-Wheat forecast.

ARGENTINA.

WHEAT CROP TO DROP.

Wheat production in Argentina, will suffer a steep decline because of government policies, according to the leader of farm union Argentine Rural Federation, Mario Llambias.

Llambias was one of the leaders of the four main farmers groups, that instigated the 4 month stoppage by farmers, in retaliation for the proposed increases in export tax. in March 2008.

Although the farm dispute was ended on July 17 2008 in Congress, the farmers are now embarking on a new campaign against the government, in regard to diesel subsidies for small farmers and drought relief.

According to Llambias, the wheat sown for this season of 4.5 million hectares, as opposed to 5.8 million hectares in the 2007-2008 season. The government argues, that this is a result of the recent drought and the farmers have planted soy in place of wheat, that needs less water.

According to industry sources, Brazil is now giving incentives to farmers to plant wheat, as the can no longer rely on Argentina as a source of supply. Brazil is the main customer for export wheat from the Argentine.

The farmers are demanding that the government, immediately open the export permits for wheat, that have been stopped, in order to ensure enough supplies for the domestic market.

The government are claiming, that the additional export taxes imposed on wheat, were to guarantee enough wheat for the domestic staples, such as flour, bread and pasta.

The situation in Argentina today, appears to be that as one bone of contention is laid to rest, another one, appears to surface.