Osvaldo Cappellini, president of Centro de la Industria Lechera – the industry body for Argentina's dairy processors and president of the Global Dairy Alliance – said that despite rapid growth during the past 10 years, several factors would limit Argentina's growth potential in the short to medium term.

Fears that the world faced an imminent surge of dairy exports from the region were likely to prove unfounded, at least in the short term, Mr Cappellini said.

"Production growth has slowed for the time being as farmers reduce feed rates and some dairy land is shifted to crop production in response to rising grain prices," Mr Cappellini said during a speaking tour for rural banker Rabobank, as part of its "visiting experts" programme. "Dairy productivity is highly dependent on grain prices."

In addition, Mr Cappellini noted that the continued rise in domestic consumption was likely to soak up much of any increased production in the short term, which would absorb any significant competition in New Zealand's key export markets.

Argentina had gone from exporting 1.1 million litres of milk or milk equivalents in 1996 to 2.7 million litres in 2006.

Mr Cappellini, who is also the director of corporate affairs at Mastellone Hermanos, Argentina's second- largest dairy processor, also said: "Certainly, in the long term, potentially we may compete for the same market at the same time".

Source: Stuff.co.nz