High wheat prices, a government tax rebate plan and expected good weather will prompt Argentine farmers to expand planting of the grain by 40 percent this season compared with the 2012/13 crop year, Agriculture Secretary Lorenzo Basso said on Tuesday. 

"The area will be close to 4.5 million hectares, for sure," Basso told the Reuters Latin America Investment Summit.

In the 2012/13 growing season, which ended in February, the Argentine government says farmers sowed wheat on 3.16 million hectares, the smallest area on record.

Other estimates vary. The Buenos Aires Grains Exchange forecasts Argentina's 2013/14 wheat area at 3.9 million hectares, up from its estimate of 3.6 million last season.

 

Argentine 2013/14 wheat planting has already begun and the country is a key supplier to neighboring Brazil.

Farmers have however turned to other crops in recent years due to government export curbs meant to ensure ample domestic food supplies, but that growers say distort prices.

To reverse the trend and spur more wheat sowing, the government is giving tax rebates to farmers to compensate for a 23 percent levy on wheat exports.

"Wheat planting area will increase for several reasons: the rebates, good soil moisture and better market conditions," Basso said. Benchmark Chicago wheat prices are up 3.8 percent so far this year.

In March, Argentine officials authorized exports of 5 million tonnes of 2013/14 wheat as part of the drive to increase production. In the past, export quotas were announced in small increments, a system farmers disliked because they said it made accurate crop planning impossible.

The U.S. Department of Agriculture (USDA) forecasts Argentina's 2013/14 wheat crop at 13 million tonnes, up from the previous season's output of 11 million tonnes.