Cattle farming in Argentina can be competitive with growing Soy in many regions
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Farmer and partner of Openagro, Guillemo Villagra, has made a comparison of profitability between soybeans and livestock, in pesos ( note not dollars ). He considered the production on his own farm when he looked the profitability of soybeans against breeding or rearing cattle.
While livestock demands higher initial costs (cows, facilities, etc.), the conclusion is that when analyzing the business today income from livestock is many cases more profitable than soy when dealing with AR pesos.
In the West of Buenos Aires, you can expect to grow yields of soy of around 3200 kilos per hectare and total operating cost of 4973 pesos per hectare. There, for soybeans Villagra calculated the return on investment to be around 41.81 percent.
In southern of Cordoba he evaluated the yield of 3000 kilos per hectare and operating costs of 4828 pesos. In this region the profit margin is around 36.24 percent.
To the North of Buenos Aires / South of Santa Fe he considered a yield of 3,800 kilos per hectare and costs of 5349 pesos per hectare. He estimates the return on investment of 60%.
“There is a point where you can make livestock farming and agriculture complementing activities. In my opinion, having a farm where they can do both activities gives you the right balance between risk and return,” he said.
In Globaltecnos also made a comparison considering an annual business of renting land for cropping for the southeast of Buenos Aires. In this case, he included the rental costs. The profitability of soybean first after income tax is 10%. Meanwhile, the income from the business of the second winter crop giving 21 percent.
The margins from this comparison show that most advantageous business for now is for cows , Matthias Amorosi of Globaltecnos said. “In livestock it is a business in pesos that devaluation does not necessarily mean that the selling price will increase therefore the agriculture versus livestock business can become less profitable as agriculture benefits from devaluation whereas cattle farming does not. ”
Please note these calculations do not take into consideration land cost. Also current Argentine farmers must sell beef in Pesos not Dollars unlike the Soy grower.
Here is the article in Spanish
La Nacion
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