Based on current technology, the expansion of soybeans has almost plateaued in Argentina. Good news for U.S. soybean farmers, as the growing demand should result in continuing high prices, at least in the short to medium term. While there is potentially room for expansion of cropland in the more marginal areas of the country, the impending ban on foreign ownership may put a brake on this, as significant capital is needed. Over the medium to longer term, production should increase, as new types of soybeans giving higher yields are introduced.

Argentina’s Pampas region is its most productive region, and it’s intensively used for producing soybeans, corn and other crops. Over half of the massive growth in oilseed and grain production in the 15 years has come by utilizing what was previously pastureland. One-quarter of the recent growth comes from double cropping.

“The conversion of more grazing land to arable land in the Pampas has reached its limit,” says Mauricio Davidovich, agricultural engineer and farmer in Pergamino, Buenos Aires province. Perhaps with the adoption of new technologies such as Bt drought-resistant soybeans, we will be able to increase yields and plant crops into areas previously unsuitable for crop production, he adds.

Argentina’s farmers are world leaders in the adoption of no-till farming. First introduced to the country in 1977, it was only from the mid-1990s onward that it really took off. By 2006, around 49 million acres were using no-till technology, representing 68% of all cropland. The U.S. lags far behind with no-till practices accounting for around 25% of the total cropland

With soil erosion a major problem in the Pampas region, no-till was a perfect solution to enable the expansion of cropland.  Low production costs associated with no-till were another attraction, as Argentine farmers receive no subsidies.

Rolf Derpsch, international expert on no-till, credits its spread to the promotional activities of Argentine Association of No-till Farmers, and annual no-till conferences in particular. Local machine manufacturers were also quick to respond to the demand for no-till seeding equipment.

The use of glyphosate is another potentially limiting factor in Argentina’s soybean productivity. The local scientific establishment has vigorously debated glyphosate’s use and calls for it to be banned. In Santa Fe province, a court banned its use near populated areas. “Such moves are causing a lot of angst among farmers and may impact the use of no-till longer term,” says Fernando Nazar, an agricultural consultant and producer in Buenos Aires province.

Export taxes on soybeans continue to be a burning issue among Argentine farmers. The government needs the current level of export taxes to maintain current spending levels ahead of the 2011 presidential election, says Nazar.

Argentina is set to follow the Brazilian government’s prohibition of foreign ownership of farmland. While no specific plan exists yet, Agriculture Minister Julián Domínguez announced in August that such a policy was a necessity. “Foreign land ownership is less an issue in the Pampas region, as much of the foreign purchases are in more marginal agricultural areas such as in the north,” says Hernán Viera, agricultural engineer in Balcarce, Buenos Aires province.

This is part of a series on agriculture in Argentina by John Kennedy, a writer and economic consultant. You can contact him at [email protected].