Canadian farmers view Argentina as a global powerhouse – one of the world’s top exporters of soybeans, corn and wheat.
But talk to Argentinean farmer David Hughes and you get a radically different perspective.
In fact, Hughes says Job No. 1 for him is “surviving our government’s economic policy.”
“Our government policy has never supported agriculture – we have no safety nets and usually we’ve been overtaxed,” says Hughes, CEO of Traulen Co. S.A. that manages five farms with 6,500 hectares (16,000 acres) of cropland producing corn, soybeans, wheat, and barley.
“We have a 35% export tax on soybeans, 23% export tax on wheat, and 20% export tax on corn. Plus there are export quotas on wheat and corn. This means our corn and wheat prices are roughly half those in the rest of the world. So we have to find a way to survive in such an environment.”
Farmers have been in a long-running battle with the Argentine government over its agricultural policy, and even famously went on “strike” last summer, temporarily refusing to deliver grain to protest the taxes on their crops. Soybean export taxes are a key revenue source for a government cut off from the global bond market since defaulting on its debt in 2002, and desperately needing cash to fund social programs for its burgeoning population.
High taxes and an annual inflation rate of 25 per cent have altered many farming practices, says Hughes, an internationally recognized farm management expert and featured presenter at last summer’s 19th International Farm Management Association Congress in Poland.
“In Argentina, if you’re not good at the business of farming, you’re out of the game pretty quickly,” notes Hughes.
“To survive, you have to bring your costs very low. Most farmers don’t own their own machinery and work with contractors in order to bring their capital costs down. As well, over 70% of the land is in no-till, which means less fuel use, less iron, and less labour. We are also very attentive to rotation and planting dates, all with the goal of making more with less.”
The most powerful tool for many farmers is a simple spreadsheet, he says.
“What you want is a quick and easy way to understand which is your best option,” says Hughes. “Once you decide what you want to do, then you work out more detailed budgets. But first you need this quick and easy way to bring everything together – markets, weather, crop production expectations, and so on.”
For example, although soybeans are generally the biggest money-maker, Hughes resists the temptation to continuously crop the oilseed, and rotates it with a grain crop to reduce disease and insect pressure. Corn is the first choice, but the risk of drought in his area (Buenos Aires province) means he must first assess the risk of growing that crop.
“If the moisture levels are 70% to 75% of the soil’s holding capacity, then I will plant corn,” he says. “If not, I will skip it. I have to be flexible.”
Those are very precise numbers, but Hughes hasn’t plucked them out of the air.
He is an active member of AACREA (the Spanish acronym for the Argentine Association of Regional Consortiums for Agricultural Experimentation), a group of farm management clubs created more than 60 years ago. There are about 200 such groups in the country with roughly 2,000 members in total. Each group hires a part-time consultant, usually an agronomist or vet, who advises them on new or improved production techniques, and also analyzes production and financial data that members provide from their farms.
The organization also has regional bodies and a national one that undertakes studies and field trials (including one that looked at moisture levels at seeding and its effect on corn yields). Advisors have a parallel structure, with regional and national associations.
The twin-track process – using the best scientific data and constantly reviewing individual crop and whole-farm budgets – is designed to encourage farmers to make “strong decisions,” says Hughes.
“There are large, medium and small-sized farmers who are members, and it’s mainly those who are open to innovation, sharing, benchmarking, and trying to improve their business. It doesn’t mean they are the best, but they are trying to push things and stay ahead of the game.”
The system is supported by constant and detailed field scouting, with every crop-management decision subjected to a return-on-investment analysis. For example, the first sign of a disease problem will prompt some intensive field scouting and setting a target for infestation levels before engaging a custom contractor to spray.
“We have to be very detailed and careful on the scouting,” he says. “We never spray ‘just in case.’”
The recent run of high grain and oilseed prices has made the practice of piling on inputs to maximize yields a winning strategy for North American farmers. But when those circumstances change, the best farm managers will quickly adopt a new approach, says the widely travelled Hughes (who earned his masters degree in agricultural economics at Texas A&M).
“It’s not about the economic environment – it’s how you react to it,” says Hughes. “I know many Canadian and American farmers who would do very well in Argentina. It’s really about your attitude and how you go about your business.”
The next International Farm Management Association Congress (ifmaonline.org) will be held in Canada in 2015.