Argentina policies blamed for shortages

Marketplace Staff Jul 17, 2009

Argentina policies blamed for shortages

Marketplace Staff Jul 17, 2009


KAI RYSSDAL: There was some rare good news for the Argentine economy this week. A huge boost in its trade surplus. About 40 percent of it came from food exports. But still, Argentine farmers aren’t happy. They worry that Argentina may soon have to import beef and wheat for the first time in decades. A severe drought is part of the problem. But, the farmers say government policies aren’t helping.

Ian Mount reports from Buenos Aires.

Ian Mount: The start of sales at Argentina’s biggest cattle auction, the Mercado de Liniers. A scrum of buyers bids on some of the 10,000 animals in the stalls and stalks the yammering auctioneer.

But ranchers say business is bad. Roberto Matarazzo Sword has 25,000 acres in northern Argentina. He complains beef prices have stalled for three years, while his costs have gone up some 20 percent annually. He’s going to have to cut his herd substantially.

Roberto Matarazzo Sword: We estimate that in one or two years we’ll probably go from 6,000 head of cattle to 3,000.

Matarazzo blames the agricultural policies of Argentine President Cristina Fernandez de Kirchner and her predecessor and husband, Nestor Kirchner. Facing 20 percent inflation and spiraling food prices, they imposed price controls on food. They also placed strict controls on exports of staples like wheat and beef. For Fernandez de Kirchner, the idea is to take care of Argentina’s poorest citizens.

Cristina Fernandez de Kirchner: As president of all Argentines, when I defend the interests of all citizens I must prioritize the interests of those who live on only one paycheck.

Her policies get a lot of support from people in the poorer districts surrounding Buenos Aires. Hilda Lopez is president of the municipal council in Hurlingham, a Kirchner stronghold.

Hilda Lopez: What the farmers have to do is set reasonable prices for domestic consumption and then export what’s appropriate.

But economist Federico Thomsen says Kirchner’s policies have had the exact opposite of their intended effect. A recent study indicated that less wheat will be planted this year than at any time since 1897. The export controls are forcing farmers to drop wheat and beef for crops that they are allowed to export at a decent profit.

Federico Thomsen: Because Argentines don’t eat soy beans, the government has hampered less that production. So a lot of land dedicated to cattle has shifted toward soy bean.

The amount of land turned over to soy has doubled over the last decade. And AACREA, a research group that studies Argentine agriculture, says that over the past year the number of cattle in Argentina has fallen by about 5 percent.

Problem is, Argentines are the world’s biggest beef eaters. Each consumes about 150 pounds of beef a year. At this rate, Argentine farmers soon won’t be able to produce enough for the local market.

Malcolm Rodman: Well, I think it’ll be quite a disaster.

Malcolm Rodman is a fourth generation rancher who sits in the beef committee of a local farmers’ union. He says disaster will probably be averted. Argentines may end up eating more chicken and some farmers, like Rodman, will probably try to tough it out.

Rodman: We try to not go down with the amount of cattle, because we know it will turn over sooner or later.

What Rodman really wants is more farmer friendly policies and fewer export restrictions. But in the present global downturn, Argentina’s government may not be ready to drop the strict export limits and high export taxes that are giving farmers headaches.

In Buenos Aires, I’m Ian Mount for Marketplace.

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