April 3, 2017 / 10:47 PM / a year ago

Deere Argentina sees farm optimism, more investment, bigger crops

BUENOS AIRES, April 3 (Reuters) - Argentine growers have been energized by the country’s new tax and trade policies, setting the stage for increased grains planting and farm investment, the head of the local unit of agricultural machinery company Deere & Co said on Monday.

The country is the world’s top exporter of soymeal livestock feed and a major supplier of wheat, corn and soybeans at a time of climbing demand as global population grows toward 9 billion.

The free-trade policies of President Mauricio Macri, elected in 2015 after an eight-year feud between the farm sector and Argentina’s previous leader, have already sparked wider planting

of corn and wheat.

Based on conversations with farmers, it is a trend that John Deere expects to continue, Gaston Trajtenberg, president of John Deere Argentina, said in a telephone interview.

“They have an optimistic approach in that even if commodity prices are not at the highest level they can plant and see a two or three year term that will allow them to increase investment,” he said.

“The speed or the pace of growth will depend on how much confidence they feel about the sustainability of the business environment moving forward.”

The staying-power of Macri’s policies will be tested in October’s congressional election. He is expected to run for a second term in 2019.

The Argentine farming expansion comes amid heightened competition in the global grains market, with world stocks of key staples including corn, soybeans and wheat all projected to swell to record highs this season.

In February, Deere forecast that equipment sales would rise for the first time in three years, partly driven by improving economic conditions in Brazil and Argentina.

The South American market is expected to show industry-wide sales growth of 20 percent in harvesting combines and 15 percent in tractors in 2017, according to Deere projections.

This season’s wheat crop was 14.96 million tonnes versus 10.9 million the previous year, according to the Rosario grains exchange. Corn is expected by the exchange at 38 million tonnes versus 30.1 million and soybeans are projected at 56 million tonnes versus 55.5 million.

“Every time you find available financing and see a horizon with sustainable rules, the sector would like to keep investing and improve efficiency,” said Trajtenberg.

John Deere Argentina makes tractors and harvesting combines in Granadero Baigorria, a town near grains hub of Rosario. (Additional reporting by Karl Plume in Chicago; Editing by Mary Milliken)

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