Production costs increased this year
Sowing for the winter wheat harvest is finishing in good form said the president of Agronegocios Del Plata (ADP) Marcos Gigou. “The good climatic conditions allowed wheat planting to move at a good pace in a situation pretty close to ideal, although it is still very early to know if the yield will be good” said Gigou.
Different operators and analysts said before sowing began that there will be a sharp drop in the amount of land dedicated to wheat cultivation. That prediction is proving true. According to official figures, wheat has been planted on around 400,000 hectares this year compared to 593,400 hectares last year. The drop is due to several factors including the including a decline in wheat’s international value and an increase in the cost of production. Gigou said that the business over which he presides (Agronegocios Del Plata, one of the major agricultural companies in Uruguay) decreased the amount of land dedicated to wheat cultivation this season. Agronegocios Del Plata sowed 17,000 hectares compared to 33,000 hectares sowed last harvest. While the company decided to reduce wheat cultivation in almost all areas of the country, the biggest decline has been in areas that are not traditionally agricultural, especially the East.
“Those areas produced lower yields but above everything thing else it was the trucking costs (since they are very far from export ports) that made the profitability in these areas fall significantly”, he said.
Agronegocios Del Plata calculated that to equal the costs of production each hectare must produce 3,300 kilos of wheat. The national average last year was 3,398 kilos according to official figures.
This Uruguay Business Reports news article is a translation of a news story that appeared in the Uruguayan newspaper El Pais. The original news article is available here. Uruguay Business Reports translation by Donovan Carberry.
Uruguay Business Reports 