BUENOS AIRES, Sept 21: Argentine cotton area could grow by up to a third this year as farmers stick to a crop better suited to small lots and others receive much-needed aid amid a credit crunch, officials said.

Argentina sees plantings rising to between 200,000 and 230,000 hectares from the 173,110 hectares sown in 2001/02, despite more attractive prices for soy, said Luis Pellegrino, an adviser on cotton at the agriculture department.

Argentina, a major producer and exporter of grains and oilseeds, saw its cotton output slide drastically in recent years as world cotton prices plunged and many farmers switched to the country’s No. 1 crop soy — which has low input costs.

But many cotton producers farm on small lots that are better suited to cultivating that crop and will not likely follow the national trend toward soy, Pellegrino said.

There are people who are accustomed to planting cotton and there are small farmers for whom planting soy on 20 hectares just isn’t profitable, he said.

Argentina produced an estimated 182,000 tons of cotton in the 2001/02 campaign, a tiny fraction of the 1.34 million tons produced in 1995/96, according to official data.

The 2002/03 season is the first since an economic collapse after a four-year recession forced the government to default on its public debt and devalue the peso, cutting off access to credit and limiting farmers’ ability to pay for supplies.

The growth in area this year will likely be driven by the smaller cotton producing provinces, where some farmers have found other sources of financing to replace beleaguered banks.

Farmers in Santa Fe province, the No. 3 cotton province last season, are getting financing from private textile or vegetable oil firms, said Oscar Martinez, director for northern Santa Fe at the provincial agriculture department.

Two private companies have launched a programme under which they are providing $4 million to $5 million to be used to finance the purchase of supplies and seeds and to help cover the costs of production, he said.

Farmers will repay the firms with the cotton they produce.

With the financial aid, Santa Fe province expects cotton plantings there to rise anywhere from 60 per cent to 100 per cent to between 15,000 hectares and 20,000 hectares this year.

Santiago del Estero also expects area to increase slightly to 60,000 hectares from 55,000 hectares last year, partly as large-scale producers from neighboring provinces begin cultivating in previously unused areas, said Nestor Machado, undersecretary of agriculture for the province.

Still, seedings in the province of Chaco, the country’s biggest producer with 93,000 hectares sown in 2001/02, will likely remain static due to financing problems and as some large producers switch to soy or sunseeds, said Carlos Vera, who heads a confederation of provincial farm groups.

Vera predicted farmers would sow 80,000 hectares to 100,000 hectares, saying any growth would depend on financing. Chaco does not have the kind of credit programme that Santa Fe does.

The main problem is the cost of production, it’s elevated and the lack of financing is absolute, Vera said.—Reuters