* Wheat farmers win change to reviled export quotas
* Gov't says 7 mln tonnes needed for domestic market
* New system will launch in late January, corn revamp next (Adds comment from industry group official, plans to change corn quotas, details)
By Juliana Castilla
BUENOS AIRES, Jan 5 (Reuters) - Argentina will reform its unpopular wheat export system, scrapping incremental quotas to try to improve prices for farmers by boosting competition in the local market, the agriculture minister said on Thursday.
The government intervenes in wheat and corn trade now by granting export permits bit by bit and subsidizing local millers. This is aimed at guaranteeing affordable food supplies in high-inflation Argentina, a major global grains exporter.
Officials also set reference prices for crops, but farmers say buyers ignore these and pay less due to restricted demand.
The new scheme will keep a cap on total exports to ensure sufficient domestic grain supplies, but it will eliminate the gradual quota system to give farmers more control over sales.
"The agreement basically is to set aside the 7 million tonnes that Argentina needs ... and all the rest will be at farmers' complete disposition to sell however they like," Agriculture Minister Norberto Yauhar told reporters after meeting with wheat industry officials.
He said the new system will be implemented starting in late January when officials announce the bulk of remaining 2011/12 wheat export authorizations. A final evaluation will be made to approve any additional shipments once the harvest is over.
Argentine farmers are currently harvesting wheat and planting 2011/12 soybeans and corn.
Yauhar estimated the country's 2011/12 wheat output at between 13 million and 14 million tonnes, above the government's official forecast for 12 million tonnes.
Asked how much wheat will be authorized for export, he said: "It could be 6 million, or 7 million (tonnes), plus whatever is left over from the previous harvest and hasn't been sold."
Santiago Cameron, secretary of the Aaprotrigo wheat industry group, said he wants to see how the new scheme works.
"This is an experimental system so we'll see how it develops, it's unlikely to be worse than what we had but I also think it's unlikely to be a serious solution," he said. "As long as there's a limit on what can be sold, there will never be a real market."
The Buenos Aires Grains Exchange on Thursday raised its outlook for the 2011/12 wheat harvest to 14.0 million tonnes from 13.6 million tonnes a week earlier.
Meanwhile, the U.S. Department of Agriculture forecasts Argentina's wheat output at 14.5 million tonnes in the 2011/12 crop year with exports of 8.5 million tonnes.
Brazil tops the list of buyers of Argentine wheat.
Farmers have also urged the government of President Cristina Fernandez to change the corn export quota system. Yauhar said ministry officials would start work on that right away, adding "this will not be a very different process" from that of wheat.
A source at the Agriculture Ministry said an announcement on the revamping of corn export quotas would come next month.
Latin America's No. 3 economy is a leading global exporter of soybeans, corn and wheat, and brisk economic growth in recent years has been fueled partly by high global grain prices. (Additional reporting by Nicolas Misculin and Hilary Burke; Editing by Bob Burgdorfer and Carol Bishopric)