Lack of crop rotation slowly turns Argentine Pampas into "sand"
Complaints about government intervention are heard from other business sectors as well. Fernandez has nationalized the country's main oil company, cut access to U.S. dollars in a bid to halt capital flight and increased state spending ahead of the Oct. 27 mid-term congressional vote.
Annual inflation is clocked by private economists at about 25 percent, one of the world's highest rates.
Soil Gets "Burned"
Soy takes more out of the soil than farmers can afford to put back by way of fertilizers. Only 37 percent is restored, meaning that 63 percent of each season's loss remains lost, according to government data.
"The process of land degradation is a fact," said a government source with direct knowledge of the problem but who asked not to be identified.
"It is happening slowly in areas of the country with the best soils and faster in areas with lower soil quality. But it is happening," the source said. "Over the long term, the country is losing yield potential. That's the biggest danger."
Corn seeds and fertilizers are about twice as expensive in Argentina as those used in soy farming, another factor pushing growers to plant soy on top of soy.
"The soil is getting burned by the lack of organic material left behind by each corn crop," the government source said.
The area dedicated to Argentine wheat, which is also subject to export curbs, has meanwhile shrunk to 3.4 million hectares from 6 million ten years ago. Fernandez caps corn and wheat exports to ensure ample local food supply and control inflation.
Food prices in Argentina are still up as millers run short of grain to make bread and other staples due to a miscalculation in the size of the 2012/13 wheat crop that allowed for an initial rush of exports, leaving domestic stocks painfully thin.
Officials have hinted at coming modifications to the export curbs as pressure mounts on the government to come to terms with farmers. The farm sector is a key pillar of the economy even though it offers relatively few votes and carries little Congressional clout due to the low population of the Pampas.
The government will eventually have to face the fact that lower quality soils will mean lower farm tax revenue.
Locked out of the international capital markets since its 2002 sovereign default, Argentina depends on farm revenue to fund social programs for the poor, particularly in the heavily-populated Buenos Aires suburbs.
"The lack of crop rotation will not cause a disaster over the next five to 10 years, because Argentine soils are naturally very rich," the Argentine government source said.
"Over the longer term the physical structure of the soil is being depleted. The consequences for future generations are unpredictable."
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