Guide to promote the growth of the maize value chain in Argentina

The maize value chain has great growth potential in Argentina. This piece attempts to outline which would be the most relevant agenda items for the forthcoming years. We have included various topics: logistics, transport, increased yields, fertilizers, storage, biofuels, etc.

  1. Increased yield potential in maize

Argentina has a good agricultural productive potential through the elevation of its yields per surface unit. Although the increase in yield potential is one of the ways to scale production, there is always the possibility of closing the gap between the potential yield (in this case, the yield potential limited by the availability of water) and the one actually achieved. The potential yield is based on the full exploitation of the technologies that are available to the producer today.

The yield gap has been considered as proximity of the actual unexploited production on the cultivated land. Studies from the year 2015 calculated that the yield gap could be estimated at 41% in wheat and maize and 32% in SB, without resorting to expanding the area. With the growth of maize production in Argentina in recent years, this gap could surely been reduced, but there are indications that some variables, on which work can continue to increase the corn harvest. Among them are fertilization practices, measurements of water in the soil at planting time for a more adjusted management, the greater and better use of climate forecasts, etc.

  1. Infrastructure requirements for the development of the maize value chain:

* Logistical improvements promoting multimodal transport in the cereal value chain: it is necessary to advance in a comprehensive and multimodal logistics plan, consolidating the advances that have been carried out in the railway sector (FFCC Belgrano Cargas with the production of the north of the country in the branch that includes the Joaquín V. Gonzalez- Avia Terai- Gran Rosario stations), strengthening truck transport and including the prompt international tender for the dredging and marking of the Paraná-Paraguay Waterway in the section between kilometer 1238 of the Paraná River, a point called Confluence, to the Natural Deep Water Zone, in the outer Río de la Plata.

* River domestic transport of maize: It is important to increase the movement of maize through the Paraná River through the use of barges from the north of the country to the Greater Rosario city area. This will reduce transportation and logistics costs to export port terminals. At present, the transport of merchandise in this section varies annually between 600,000 and 800,000 tons, of which approximately 60% corresponds to maize. It is possible to increase the quantities transported in the coming years with a firm policy of incentives for this means of transport.

* Improvements and maintenance of highways and routes: a road infrastructure in good condition is essential to reduce the disparity in competitive opportunities between maize producers and between companies located in places far from the centers of demand and those located at a shorter distance. Fundamental works are the construction of the National Route 34 highway in the National Route 19-Greater Rosario city area section, the National Route A012, the National Route 33 highway from Rufino city to Rosario city, and the access to the port terminals and factories of the great Rosario area beads.

* Improvement of rural roads: Argentina has 400 thousand km of rural roads, where 270 thousand are located in Buenos Aires, Santa Fe, Córdoba, Entre Ríos, and La Pampa provinces. Urgent intervention is required since there are roads without maintenance, severe erosion, cuts that are more and more prolonged, trucks without completing their load so as not to fit in, high transportation costs.

* Storage: it is necessary to promote lines of credit and specific tax incentives so that more producers can build fixed silos in their fields, as well as investments in capital goods from cooperative and private stockpiles.

  1. Requirements for gas pipelines and other measures to increase the local production of fertilizers for the development of the maize value chain:

  • Increased installed capacity at the Profertil Plant

It is necessary to specify the duplication of the current theoretical production capacity of the Profertil plant located in Bahía Blanca city, which today produces about 1.2 Mil MT of urea per year. Specialists indicate that it could become the first major petrochemical project in the country in almost 20 years. A work of these characteristics would generate the creation of more than 1,500 direct and indirect jobs. The Profértil urea plant would have a consumption of 2.5 million cubic meters per day (MMm3/day) of gas. The expansion of the facilities would have been planned from its initial design, but it never materialized due to a physical-economic limitation: the lack of raw material (gas) at competitive prices. The commercial exploitation of Vaca Muerta gas and the possible construction of the Néstor Kirchner Gas Pipeline now open the door to overcoming this obstacle.

* Sanction of the draft Law of the Regime for the Promotion of Federal, Inclusive, Sustainable and Exporter Agroindustrial Development promoted in the CAA regarding the promotion of fertilizers

To encourage the adoption of technology and promote soil nutrition, it is important to sanction this law and correct subsequent regulations. It establishes that maize producers who purchase fertilizers or seeds could receive a non-transferable tax credit certificate whose amount would be determined as follows:

  1. a) The income tax rate is applied to 50% of the expenses corresponding to organic and inorganic fertilizers, inputs -including biological ones.
  2. b) This amount must not exceed 50% of the income tax payable by the taxpayer.

* The need for the Argentine Republic’s Central Bank to prioritize the allocation of foreign exchange from the Single Free Exchange Market (MULC) to the importation of fertilizers.

The installed capacity of fertilizers at the national level is not enough to supply domestic demand, so a large proportion of these inputs is imported together with raw materials such as phosphate rock. In 2021, Argentina consumed 5.6 Mil MT of fertilizers, of which 4.5 Mil MT were imported and 1.1 Mil MT manufactured in the country. Imports in that year amounted to USD 2,200 million, with the products most purchased abroad being Urea, Monoammonium Phosphate (MAP), and Diammonium Phosphate (DAP).

Potential limitations on fertilizer imports due to lack of dollars could generate falls in agricultural production due to low unit yields, negatively impacting agro-industrial activities. The two most highly fertilized crops are maize and wheat. In wheat and corn alone, it is estimated that export losses would be generated for a value of between USD 3,300 and USD 4,500 million, according to a recent study by the Rosario Stock Exchange.


  1. Promotion of Maize Bioethanol

It is necessary to put biofuels back on the agenda and not discriminate against the maize bioethanol sector in terms of mandatory cuts or “inappropriate” pricing. There are 5 plants for the production of corn ethanol, with about 2,000 direct jobs. This industry adds the most value to maize since this processing also produces feed for livestock and the production of renewable CO2 for soft drinks; in a finished example of circular bioeconomy. As positive developments, ACA Villa María would be increasing its production capacity to 90,000 m3 in a sample of the strength of this sector.

For this reason, the regulatory decree of the new biofuels law must establish the following:

  • That E12 be a minimum and mandatory cut of 12%. That the cut of maize ethanol does not drop from 6% to 3%. It is requested that ethanol from maize be fixed at 6% by regulatory decree, just like that from sugar cane.
  • That there be a price formula for bioethanol that ensures that costs are covered with optimum and fair profitability.

  1. Economic challenges and elimination of barriers to trade to achieve greater competitiveness in the maize chain

Quotas (balance volumes) and temporary export closures: these types of measures are not convenient. They affect the links in the chain and lead to a retraction of investments in the crop. Argentina needs to increase production and the necessary condition for this is that the producer perceives the conditions of transparent markets, prices that arise from the free game of supply and demand and without interference to be able to glimpse what the needs of consumers are and market their products.

Reduce tax pressure: tax reform is advocated that includes a lower rate of income tax (today it averages 30%), lower taxes on personal assets, gross income on supplies, reduction of the road tax in numerous jurisdictions, etc. These measures will enhance the profitability of companies in the sector and producers, promoting investment.

External debt: it is key to reach an agreement with the IMF to refinance the external public debt of the Argentine Republic and subsequently the debt with the Paris Club. The country needs to grow, obtain international financing for its companies, increase foreign direct investment and stabilize its economy.

* Fight inflation: the high rates of general price increases in Argentina discourage investments within the sector.

* Unify the exchange rate: within the framework of the current exchange control, the ideal would be to reduce the current gap between the official dollar and the financial dollars (MEP and Cash with Liquidation).

* Need for financing at reasonable rates both in pesos and dollars for maize producers and enterprises that promote the industrialization of the cereal.

* No approval of the instrumentation of Trusts in any of the agro-industrial products. The Rosario Stock Exchange has expressed its “non-approval” of the proposals for the constitution of trusts in any of the agro-industrial products, considering the following:

  1. a) That they will not provide an effective solution to the problem of the generalized and sustained increase in food prices that our country is suffering.
  2. b) That generate interference in the normal functioning of institutionalized grain markets, affecting the formation of reference prices.
  3. c) That goes in the opposite direction to the need to have clear, predictable, and long-term rules that encourage investment.
  4. d) That they will end up causing an additional production cost, which, in addition, must face a situation of extreme water scarcity that is causing serious damage, damage that led various provinces to declare an agricultural emergency and/or disaster, as is the case of Santa Fe province.
  5. f) That its effects will be negative in the medium term for production, exports, and the generation of foreign exchange.

* Multi-risk agricultural insurance: the possibility of having agricultural insurance of these characteristics would benefit all the parties involved. The farmer would have a profesional management instrument to ensure his risk situation. The State would achieve stability in the agrarian sector and would have support to face the challenges of climate change. And the insurance industry would be involved in the long term with the prospect of showing its important contribution to predictability.

Source: https://bcr.com.ar/

Photo: REUTERS/Stringer

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