A farmer makes a plan – even in Argentina

15 March 2024

Trust yourself as a farmer because you can always find a way.

This was the message that David Hughes, a farmer and vice-president of Argentina’s International Farm Management Association, delivered at Grain SA’s congress.

The congress, with the theme “What keeps farmers awake at night?”, placed considerable emphasis on farmers’ ability to solve problems.

“Farmers are resilient, strong, and some of the best innovators the world has,” said Hughes, recounting the unusual plans farmers had to make in Argentina amid runaway inflation. 

With no value in the country’s currency, they had to convert their agricultural products into money. “I produce my own money. My currency is corn, wheat and soybeans,” said Hughes, whose family has been in Argentina for 150 years. “In my lifetime, the government removed thirteen zeros from our currency, the peso.”

Congress attendees listened with surprise as he told them that the Reserve Bank in Argentina cut the repo rate by 20% on Tuesday. They pay export taxes of 31% on soybeans and 12% on corn and wheat. “This means the exporter deducts all his costs plus the tax from the price he offers me as a farmer. Today, I get something like R5 900 per ton for my soybeans.”

He mentioned that due to high interest rates, farmers do not work much with banks but obtain financing in other ways, such as cooperation among farmers, or finding investors willing to share the risk in exchange for a percentage of the harvest. “Mortgage loans simply do not exist, and the loan term for equipment purchases is only three years.”

Contractors enlisted

This has also led farmers to use contractors for work done with machinery. “We plant more than 3 000 hectares and don’t own equipment – we work with contractors. This means less of my capital is tied up to pay off machinery.”

The contractors not only plant and harvest but also do spraying, which according to Hughes has the advantage that a skilled and trained person takes on the risk and responsibility of working with the chemicals. 

In response to a question about whether there are problems with delays when all farmers plant or harvest simultaneously, Hughes said it’s contractors’ job and they’re good at it. “It’s like any service someone provides. They must be able to handle the pressure, otherwise they won’t get business.”

Other innovative solutions that have saved Argentine farmers costs over the years include no-till farming, conservation agriculture and the use of silo bags, which have given them greater bargaining power when prices are determined.

Hughes has practised no-till farming for many years but has also started planting cover crops in recent years. “I consider myself someone who applies my farming knowledge to solve a problem, and the more knowledge I have of farming, the more tools I have to solve the problems and remain resilient as a farmer.”

Comparisons with SA

There are many similarities in the kinds of problems farmers in Argentina and South Africa encounter. “We have a lack of leadership and weak institutions in Argentina, so the farmers had to step in and do what needed to be done. When you work with other farmers, you learn, and you learn quickly. It is very important to have peer groups where you can seek solutions together.”

However, he emphasised that farmers must try to work with politicians to make the value chain function fully. This is because policymakers often do not realise that their laws and regulations sink farmers rather than being a lifebuoy. 

“Politicians don’t know what’s going on in farming. We must help them make a better-informed decision. Then they will understand that if farming goes well, it will lead to better income, better services, and more job opportunities. You don’t have to be friends, but go for coffee together regularly and keep them informed.”

He said the search for solutions to the problem of producing sustainable food has forced farmers in Argentina to completely rethink farming. “You don’t need to own land to farm. It’s not easy, but it can be done. New technology, new management methods and unconventional financial models make it possible for us.”

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