Argentinian Farmers and their Strikes

This New York Times article on the agricultural crisis in Argentina does not really do a good job in explaining why the government of Cristina Fernández de Kirchner has raised taxes on farmers. Instead, it makes it appear as though her policies are simply a way to alienate the farmers, who are depicted as the losers in tis scenario. Like the rest of the world, Argentinians face a bleak future when it comes to food security and naturally, as would be expected in a democracy, the government is moving to alleviate the pressure that is placed on the poor, particularly the urban poor. As the article mentions, Argentina is experiencing a agricultural boom.

Why raise taxes that make farming less efficient? Well, precisely because in this scenario, efficiency means exporting and the government wants to keep the food for the domestic market. This article depicts the farmers as oppressed but indeed, these farmers who are protesting and crippling the economy are not small farmers (the ones who produce for local consumption) but rather large estate farmers (those who export) and as is typical in how the New York Times covers Latin America, the rich are often portrayed as the victims. Shameful. In this regard, The Washington Post’s recent article is much more nuanced and seeks to give a bit more coverage of the social implications of exporting and letting your own people languish in lunger. Below is the New York Times article. See if you can pick up on the free-market spin, which seems to promote the farmer’s right to bypass their own countrymen in order to cash in on the increased international prices. Let’s put it this way. The farmers are not being taxed simply because they are successful entrepreneurs, rather, those who are producing for people outside Argentina are being asked to help out the government in its social programs. In reality, Argentinian farmers should pay even high taxes, but given the rural provinces are overrepresented in the legislature, the current export tariffs are nothing.

When the government decided in March to raise taxes on farmers’ profits, it set off a rural revolt in Argentina. For three weeks enraged farmers blocked roads nationwide, paralyzing grain and meat sales and causing food shortages.

Since then, the government has been trying to quell Argentina’s restive farmers at the negotiating table. But farmers like Marcelo and Pablo Marchetti, brothers in this country’s lush grain belt west of the capital, say the talks are going nowhere and are yet more proof that President Cristina Fernández de Kirchner, in office just four months, does not understand them.

They are preparing to resume crippling strikes of grain exports once the deadline for the talks expires on Friday. Some farmers have already spontaneously put up roadblocks in recent days.

“They don’t want to listen to us,” said Pablo Marchetti, 40, whose Italian great-grandfather founded this sleepy town a century ago. “In the short term, I just don’t see them finding a logical solution to this whole problem.”

The farmers say they are concerned not only about profits, though the steeper taxes have cut into them. They also say Mrs. Kirchner’s policies are threatening to reverse one of the great agricultural booms in Argentina’s history and to snuff out a technological and entrepreneurial revolution that has made the country a leading food source in a world racked by complaints of hunger and rising food prices.

“We have an enormous historic opportunity to grow as a country, but the government wants to punish a sector that should continue to be an engine of growth,” said Marcelo Marchetti, 39. “The world has opened its doors to us, and here we are fighting among ourselves.”

Tensions with the farmers exploded with unusual ferocity here, farmers say, in part because the new taxes touched a nerve in a nation where past governments used the farm sector to redistribute wealth to the poor.

Mrs. Kirchner’s politics have stirred memories of Gen. Juan Domingo Perón, who in the early 1950s used profits from agricultural exports to industrialize the country and lift the poor. Trying to check inflation that independent economists put at close to 20 percent, Mrs. Kirchner, too, turned to farm profits and export controls, looking to increase subsidies for the poor and food supplies at home.

Farmer discontent had been growing since at least 2006, when Néstor Kirchner, her husband and predecessor as president, limited beef exports to ensure a cheap supply at home. Once a dominant meat supplier, Argentina has watched as Brazil has passed it by, building the world’s largest beef export industry. Last year, even their tiny neighbor Uruguay exported more beef per capita than Argentina.

Rural angst reached a boiling point in early March when the government increased export tariffs for the second time since October. Under a new floating rate system based on commodity prices, tariffs reached 44 percent of the profits for soybeans. The new policies have also set de facto ceilings on prices.

Mrs. Kirchner has criticized Argentine farmers as focusing too much on cash crops like soybeans at the expense of products needed for Argentine consumption, like dairy and meat. Soy exports have grown by 263 percent since 1997, to 11.5 million tons last year. She cast the farmers as greedy oligarchs in 4X4 vehicles, and as unpatriotic plotters intent on overthrowing the government.

Just days after the latest export measures took hold, the farmers mobilized. Using Web sites, cellphones and satellite dishes, they formed a communications network linking farms of all sizes in a joint stand against the government.

Since both sides agreed to hold talks, the government has refused to back down on the export tariffs and has hardened its stance against the farmers. After promising in mid-April to lift a ban on beef exports, the government decided last week to keep it.

It also canceled a meeting to discuss the wheat sector, making any chance of lifting a ban on those exports seem increasingly unlikely. And it threatened to impose sanctions on farmers if they failed to satisfy domestic demand.

The rigidity of the government’s position is rooted in its need to “regain its political standing and avoid looking weak,” said Daniel Kerner, an analyst with Eurasia Group, a consulting firm. Solving the farm conflict is less important to Mrs. Kirchner than “making it clear to the rest of the Peronist Party that they are still strong enough and willing to play tough,” he said.

read on…

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4 Comments so far
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So are the taxes levied on the small farmers and the large estate farmers or just the latter?

Comment by Waqas

From my understanding, there is a tax on exports. Export tariffs are rare because usually countries promote exports and instead, tax imports. But in the case of food, countries are forced to tax farmers so that they keep their production for the domestic economy. So than, I don’t think the tax is aimed specifically at large farmers, but because small farmers produce for the local market, this tax has angered those who export.

Comment by subalternate

Oh ok, that makes sense. I misunderstood, thanks for the clarification.

Comment by Waqas

[…] Argentinian Farmers and their Strikes […]

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