Former Agricultural Counsellor in the European Union, Gustavo Idigoras has been nominated as chairman of the Argentinean Oilseed Industry (CIARA as its Spanish acronym). The country is the largest world supplier of soybean meal and soybean oil, thanks to that the biggest global oilseed complex was established around Rosario and the Paraná River.
Mr. Idigoras talked with www.eFarmNewsAr.com about the present of this industry, signed by a phenomenal loss of national soybean production, the remained export taxes to the soybean complex and the recent decision to raise biodiesel export tax.

-eFarm. Thanks to join with us, Gustavo. We want to know your vision about the Argentinean oilseed industry.
-Gustavo Idígoras: Clearly, the industry is affected and concerned by the lack of raw material. The drought cut 20 million metric tons of the 2017/18 soybean harvest, i.e., we have a crushing capacity above 65 MMT, while the offer is about 37 MMT and a carryover adding others 4 MMT. The consequence is a 40% of non-useful capacity, barely offset with some imports from Paraguay and other countries.

-eF: You touched a non-minor issue. You said 4 MMT of carryover when AgIndustry Ministry estimates 12.8 MMT!
-G.I.: We´ve talked this issue with officers from Ministry. They have others parameters than us, which are based on our partners data and from grain exchanges markets. Probably, Ministry will cut the carryover in June estimation.

-eF: Do the lack of raw material is affecting industry performance?
-G.I.: Of course! There is a hyper-competitive market pushing for access to the soybean grain. The companies are giving farmers some compensation via freight, storage or unloading to capture the beans.

-eF: The consequence would be a minor soybean export this season?
-G.I.: Bean exports will be significantly reduced this season. The wet and raining weather during the harvest affected the quality of the bean, that would be rejected by importers. Then, the only way out for this grain is the industry, where it is blended to obtain oil and meal, according to international quality standards.

-eF: Is the local industry in a worst situation than US or Brazilian industries?
-G.I.: In an ultra-competitive global market, certainly, we are in disadvantage respect to Brazil or US. Even from Malaysia or Indonesia, countries which are offering an important production of palm oil.

-eF: Is the industry working with a negative profit?
-G.I.: The industry is covering the fixed cost, but not the variable ones, including the raw material. It is no possible assert that sometimes industry will go to operate with a negative margin.

-eF: According to official data, in the last two seasons soybean acreage lost 4 million hectares. The government removed export tax to corn, sunflower and the rest of the crops, but remained for soybean complex. Is economic policy negative affecting the oilseed industry?
-G.I.: President Marci fulfilled its campaign promise to remove export taxes, except for the soybean complex, that is reducing in a gradual way. It’s a good news for us. We welcome a major corn and wheat ouput in a sustainable way. We hope that soybean even will improve national production but also in a sustainable way, share the field rotation with both cereals, “feeding” the large oilseed industry cluster, based at Rosario.

-eF: But, are you expecting a new reduction of the soybean area in 2018/19 season or not?
-G.I.: We hope a strong recovery of the Argentinean grain production during next season, to 135 MMT, with 2 million hectares more of soybean.

-eF: At the same time that President Macri announced a rising in the biodiesel export taxes since July 1st, he announced a minor export taxes in soybean refined oil. Was the announcement really a relevant issue for the industry?
-G.I.: We were talking this issue with the Government for a long time. Each year, oilseed industry supply food and energy chains with 8 MMT of soybean oil. If biodiesel industry doesn’t absorb 2 or 2.5 MMT soybean oil prices would sink. Clearly, the scenario since July 1st is not favorable to the biodiesel industry. In the case of refined oil, Argentina don’t reach the global shelves with this high added value oil. We consider that local industry will be able to install their soybean oil brands in the global supply chain, maybe particularly in Central America, Panama for example. At least we hope to double our sales respect 2017, but we must rely on an aggressive promotion campaign to sustain sales growth.