Argentina's sunflower seed area is expected to rise 10% on the year in the 2011-12 season as soaring prices spur farmers to increase planting, the president of the sunflower association Asagir, Ricardo Negri, said in an interview with Dow Jones Newswires.
Argentina is the world's No.2 sunflower oil exporter, trailing only the Ukraine last year, according to the US Department of Agriculture. Argentina accounts for almost a fifth of global export supply, Negri said.
Farmers are optimistic with current sunflower oil export values of $2,400 a metric ton, up from $950 a ton a year ago, Negri said.
Oil production steady
Despite the positive signs from local farmers, the USDA is expecting Argentina's sunflower oil production from the 2011-12 season to total 1.26 million metric tons, unchanged from 2010-11. The USDA pegs Argentina's 2011-12 exports at 950,000 tons, also unchanged on the year.
Sunflower seed growers are also enjoying a relatively open market, largely free from government intervention.
The sunflower seed market has largely escaped the policies which farmers of other products complain distorts markets and sharply lowers their sales price.
The fact that just a quarter of sunflower seed oil production is enough to meet local demand has helped the commodity avoid coming under government scrutiny, Negri said.
Export support local market
The industry has also developed its own system to keep down local sunflower oil prices and avoid government attention. Producers sell discounted sunflower oil to the domestic market, with those selling locally compensated by part of the fat profits enjoyed by exporters.
While Argentina's farmers are flourishing amid a global commodities price boom despite the government's policies, they worry about being vulnerable if the bubble bursts. "If prices fall, many farmers in marginal areas will stop growing crops with export taxes at such high levels," Negri said.