Argentinians visiting South Dakota focus on beef
If you look at a chart of recent prices for corn and beans, the downward trend is pretty disheartening. While cattle prices continue to be strong, the economic picture for ag isn’t very bright.
Net farm income is forecast to be $58.3 billion in 2015, down 36 percent from 2014’s estimate of $91.1 billion, according to USDA. The 2015 forecast for net farm income would be the lowest since 2006 (since 2002 in inflation-adjusted terms) and a drop of nearly 53 percent from the record high of $123.7 billion in 2013.
What’s going on in other countries like China, Brazil, Russia and Ukraine affects the prices we receive for grain and livestock. The more we can learn from those in other countries the more we can understand our dynamic industry.
In Argentina, the inflation rate was 23 percent in January, and it’s now at 15 percent. That doesn’t mean conditions have improved for agriculture. At the beginning of 2014, Dale and I traveled to Argentina with our SDARL group to learn about ag in that country. The guide for our trip, Jorge Cazenave, came to South Dakota last week with ten farmers/ranchers and the manager of their Regional Consortium of Agricultural Experimentation (CREA) for a similar experience. Cazenave has a great background to go back and forth between our two countries. He is a native of Argentina and a former ag attaché to the United States.
When in Argentina, we learned the CREA was a group of farmers who came together to share information about their operations, including financials, to come up with better ways to operate. The group decided they wanted to learn about ag in the U.S. Through translated conversations, we learned from each other. While we believe that the economy in the U.S. makes no sense at times, the Argentinians constantly struggle with a government that seems to fight them rather than work with them. Their national policies and inflation continues to create a great deal of uncertainty. The group reported that sometimes the giant bags of grain they have in their fields are vandalized, but they feel more betrayed by their government’s disregard of their industry.
When dealing with inflation, Cazenave said with a little twist of his torso, “We know how to dodge.”
The way the farmers see it in Argentina is that there are two currencies in their country: the U.S. dollar and soybeans. He joked, “We play with this fake thing called the peso. The way the people save is by keeping their grain on their farms to buy the needed inputs for the next year.” In Argentina, the government takes 35 percent of their production, so the farmers don’t get the full price. That amount belongs to the system. That means the government can’t get their taxes until that happens.
One of the U.S. farmers asked about farmers striking in Argentina. Cazenave translated, “When farmers strike, we don’t trade anything for a week. It really doesn’t impact anything, but is a way to show we’re not happy with the way we’re treated.”
Those meeting with the Argentinians offered friendship and an open sharing about their operations. The Argentinians questioned what crops we raised and how they were raised. They wanted to know what grasses worked best for which breed of cows.
After flying into Chicago, they toured a 47,000-cow dairy in Indiana. They learned about corn in Iowa. In South Dakota, the focus was on beef. South Dakota ranks fifth in the number of beef cows in the United States. At South Dakota State University, special sessions featuring SDSU staff members provided a look at research in beef cow management with a focus on reproductive aspects. The group had many questions especially about quality feed and forage, crossbreeding, the ethanol industry and using distiller’s grain for feed.
And once they reviewed the basics, they visited places like Redstone Feeders in DeSmet where 22,000 head of cattle are finished in a year. They also went West River to the ranch of Bill and Penny Slovek. The Sloveks were part of our group that traveled to Argentina. They shared information about their herd of 850 Angus composite and hybrid cows.
In Argentina, there is an export tax on beef at 15 percent. They figure that total exports are 6 to 10 percent of total production with those numbers diminishing. Sellers have to have permission to export beef, and not everyone can get permission. Cazenave noted that it’s not a very fair system.
Argentina’s economy needs major modifications, and it needs to be forced to make those changes. But the feeling is that none of their politicians are strong enough to do that. The group said that corruption in their government is increasing, and they worry about the future of ag in their country. And so do we.
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