May 21, 2013. Argentina is the world's largest exporter of the grain for popcorn, a variety that yields 50 percent more than traditional corn and whose price grew 53 percent in 2012.
In 2012, with over 20 million tons, Brazil replaced Argentina (16.7 million) of the second place in the world ranking of corn exporters, according to the Brazilian consulting firm Informa Economics FNP. However, there is a niche in which Argentina is at the top: the pisingallo (as it is called in Argentina), a variety used for making popcorn, whose price rose 53 percent to U.S. $ 850 a ton, last year.
While domestic consumption is very low, this is increased by their presence in theaters and is associated with an increased consumption of beer, according to a report by the Argentine Corn Association, composed of companies that make up the various links in the chain of production. However, 97 percent of what is produced in the country is exported.
"This is a business that, locally, began in 1989 and, between 1998 and 2000, Argentina became the leading exporter," explained from the Chamber of Processors and Exporters of Pisingallo Corn (Campi, its acronym in Spanish). Globally, the offer is close to 400,000 tons, considering normal crops in terms of production and climate in producing countries. Argentina sells 230,000 tons per year, followed by the United States (120,000). Behind are, France, South Africa and Hungary. In Argentina, there are about 50 exporters, who shipped more than 100 destinations. The sales unit is the container, whose load depends on the type of bag (from ten kilos to one ton).
The average load per container is 25 tons in bags of 50 pounds, with own or third party brands, industry spokesmen explained. The average sale, according to a participant, is two to three containers. "As a global leader, Argentina participates in the creation of prices," describes one of the three largest exporters. He adds that the price of grain is very sensitive to several factors. The most critical is the volume of local production. The surface for planting, he adds, should not exceed 70,000 hectares throughout the country, as the average yield is 3.8 tons per hectare and almost all the production is exported.
"In a little niche market like pisingallo, planting should be intelligent. It must produce what the market needs and no more, both in quality and quantity," he says. In this regard, the pisingallo competes for land with conventional corn, as they have the same agronomic properties. Its yield is, on average, a half. But its value, normally, exceeds between 1.8 and 2 times that of common corn.
"The price paid to the producer can be set by a fixed amount or a percentage (between 45 and 50) of the FOB value of exports. Or a mix of fixed price and participation on the FOB," they comment from Campi, entity comprising 12 companies: Agro Uranga, Anka, Alberto Marchionni, Alemar, Alicampo, Conagra Snack Foods, Curcija, Pop Argentina, Pop Company, Reliance Export, Snack Crops and Gregorio, and, Numo and Noel Werthein, a company that founded the empire that, among other assets, now controls Telecom. Among Snack Crops, Pop Argentina and Werthein, account for almost 70 percent of exports, according to industry sources.
Sensitive Grain
The climate factor is also fundamental. "In a document, they compared the results of pisingallo and common corn in the fields in which the two crops were planted. One can see that pisingallo depends much more on the environment than conventional corn and, as the conditions for growing are worsened, yield differences are increased. Conventional corn has relatively better performance in adverse conditions. But when the climatic environment improves, the pisingallo yield can exceed 50 percent that of a common corn," says Louis Miceli, advisor at CREA Herrera Vegas, a rural consortium for agricultural experimentation in the region of Salta.
In the production cycle 2011/12, whose harvest was conducted between March and May last year, the Argentinean production of pisingallo suffered from an unprecedented drought, with very high temperatures. Campi estimated that weight losses were 50 percent compared to normal yields expected.
As a result, product FOB prices recorded a historic rise from U.S. $ 585 per ton in January to more than U.S. $ 900 in November. The increase is in contrast with the trading cycle 2010/11, when, by excess supply, according to the organization, were planted more than 90,000 hectares-, the price collapsed to U.S. $ 300. Unlike conventional corn, which is taxed 20 percent, pisingallo withholdings are 5 percent of the FOB value. It is not the only advantage.
"This product is very interesting to diversify risks, to get rid of traditional production and to seek comparative advantages," says Fabian Pereyra Iraola, a farmer from Hipólito Yrigoyen region (Salta). Pereyra Iraola stresses it is a market unhampered by the Government, is small, so its price doubles that of traditional corn- and it impacts on freight 50 percent less than conventional corn. "It's a crop with safe demand and less transportation costs. The ideal thing is to have some presence in the market and an open door to an exporter, which allows entering the business at the right time and not when there is oversupply affecting the price," he adds.
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