Fertilizers are evidently applied in the expectation of an economic gain. Application may be low for several reasons. There are regions where the expected responses are below the cost of the input. For instance, in a large part of the Chaco plain and the west of the Pampa region average soil phosphate levels are higher than critical levels and are sufficient to sustain adequate yields. Agricultural activity is recent in these regions. For the same reason, potash fertilizers are not used in the Pampa region. Another factor explaining a low use or a low fertilized proportion of the crop area is a low yield potential due to low rainfall; this occurs with dry land crops in the semi-arid region. At the other extreme, fruit crops integrated with the agro-industry, using a high degree of technology, often receive high rates of fertilizers. In the case of these crops fertilization may represent a rather low proportion of the total cost of production.
For many years, cereals were subject to export taxes. In 1989 these amounted to 30 to 40 percent of the f.o.b. value. At the same time, there were import duties amounting to 65 percent on fertilizers and agrochemicals. This resulted in an unfavourable ratio between the crop and fertilizer prices. Two years later these restrictions were reduced or lifted and this resulted in a massive adoption of fertilizer use in cereals.
At the same time, in 1996 and 1997 when cereal prices were high, there was high investment in machinery, irrigation equipment and technology in general, permitting an increase in maximum yields.
Table 12 shows the changes in recent years in the relationship between the prices of cereals and urea and DAP between 1998 and 2002. Despite some variations, the divergences are not sufficient to affect use significantly.
A milepost in the distribution of fertilizers was the ‘Barter (Canje) Plan’ established under the 1984 law for the “Promotion of the use of fertilizers”.
TABLE 12
Relationships between grain and
fertilizer prices
|
Year |
1998 |
1999 |
2000 |
2001 |
2002 |
|
Urea |
|
|
|
|
|
|
Wheat |
1.79 |
1.77 |
2.09 |
1.79 |
2.01 |
|
Maize |
2.08 |
2.10 |
2.73 |
2.64 |
3.00 |
|
Soybeans |
0.93 |
1.16 |
1.25 |
1.29 |
1.58 |
|
Sunflower |
0.80 |
1.16 |
1.58 |
1.30 |
1.44 |
|
DAP |
|
|
|
|
|
|
Wheat |
2.78 |
2.90 |
2.78 |
2.32 |
2.62 |
|
Maize |
3.22 |
3.45 |
3.65 |
3.42 |
3.91 |
|
Soybeans |
1.44 |
1.91 |
1.67 |
1.67 |
2.06 |
|
Sunflower |
1.24 |
1.90 |
2.11 |
1.69 |
1.87 |
The Barter Plan in fact dates from 1973 but it was revised in 1984. This system established an exchange rate between fertilizers and grain for fertilizers purchased on credit against delivery of grain. The original ‘barter’ rate was 1.95 kg of urea for each kg of bread wheat. At that time cereal exporters were the main suppliers; the cereal barter provided an assurance of payment for fertilizers supplied on credit.
During the period of strong expansion from 1993 to 1997, the financing of inputs was effected mainly through bank credit. From 1997 to 2001, bank credit accounted for 6 percent of their finance, dealer credit for 40 percent, cash for 38 percent and grain ‘barter’ for 24 percent.
After the 2001 financial crisis, fertilizers were supplied mostly either against grain or cash, but with the stabilization of the economy the interest in barters has again increased. The grain ‘barter’ has important tax and financial advantages. There are two main systems, one at the current cereal price, the second at a ‘futures’ cereal price. A less common system is one based on an ‘open’ cereal price.
The alternatives currently available to the producer for purchasing fertilizers and other inputs are:
