ECONOMY-ARGENTINA: Striking Farmers Demand Boost Out of Crisis

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Apr 20 1999 (IPS) - Hundreds of thousands of farmers in Argentina are in the middle of a three-day strike called by the country’s four rural associations to demand a boost out of the worst crisis to hit agriculture this decade.

Trucks stopped taking produce to the ports Monday, and activity in farmers markets has been brought to a virtual standstill.

The strike was called by the Rural Society – which groups large landholders, who have never before taken such a drastic measure – the Argentine Agrarian Federation of small farmers, and Carbap and Coninagro, which represent farming cooperatives.

For the first time since the economic stabilisation plan and currency board holding the peso on par with the dollar went into effect in 1991, small, medium and large producers have joined together to demand measures to at least partly ease the impact of the crash in international commodity prices.

Argentina is essentially a farming country, with agricultural products accounting for nearly 60 percent of exports.

The problems faced by farmers vary according to property size. Large landowners are protesting new income taxes and increased interest rates which will cut into their profits to the tune of 450 million dollars to go to state coffers.

Meanwhile, the small and medium farmers who were able to fight their way out of debt in the past few years have once again found themselves on the brink of bankruptcy. Of the total of 31 million hectares of planted farmland, 12 million are under mortgage, according to the Argentine Agrarian Federation.

Agricultural analyst Alejandro Ramirez pointed out to IPS that taxes comprised 40 percent of production costs of Argentine farmers, and that the sector was in the midst of a tight credit squeeze. “Farmers can no longer even make it through the doors of a bank, because they have a reputation as defaulters.”

The Argentine Agrarian Federation, the most combative group of farmers, is planning even harder-hitting protests next month after the season’s harvest is in.

The crisis is “destroying the countryside,” said Rene Boneto, the chairman of the Federation, who added that “there are no solutions for small and medium producers under the current model.”

Carlos Pagliole, who farms 200 hectares in the northeastern province of Santa Fe, pointed out that 48 percent of farmers in his area had sold out and left for the city. “The rural middle class is being swept away by the globalisation process,” he stressed.

Furthermore, 67 percent of farmers in Santa Fe are in debt. And even though this year’s overall agricultural yield is projected at a decent 60 million tonnes, today’s prices leave almost no profit margin, he added.

The over 30 percent crash in international prices triggered by the Asian crisis was aggravated by the devaluation of Brazil’s local currency since mid-January and tax hikes at home. The price debacle has been further compounded by subsidies shelled out to farmers in the European Union and the United States.

The average price for a tonne of grains climbed to 300 dollars in 1996. But in the wake of the Asian crisis, it plunged to 150 dollars in 1998, and to 120 dollars this year. For farmers in Argentina, that will mean a drop of 3.4 billion dollars – or 30 percent less volume – from last year, already a bad year due to low prices.

The drop in prices has also hit farmers in neighbouring Uruguay – who staged a historic march on parliament last week, complete with mounted “gauchos” (cowboys), demanding measures to curb the rural exodus to the cities, in a country where 85 percent of the population already lives in urban areas.

The head of Uruguay’s co-governing National Party Juan Martin Posadas wrote, in a column published by the Montevideo daily ‘El Observador’, that the agricultural sector’s troubles arose from the fact that a cycle of profitability which had already enjoyed its moment of glory was coming to an end.

“The production of foodstuffs in today’s world only provides a sufficient profit margin in poor countries,” said Posadas. “In the First World, the activity lacks economic rationality, and only subsists on the basis of colossal subsidies.”

But in Argentina, farmers believe the sector can still be saved, and that it should be in order to prevent the social collapse that would occur if thousands and thousands of farming families were to abandon the countryside and swell the ranks of the urban unemployed – in a country with an official unemployment rate of 12.4 percent.

For that reason, the rage of farmers is trained mainly on the government of President Carlos Menem, which far from assisting the sector, implemented tax hikes in December.

“When (Mexico’s) ‘tequila effect’ occurred, the government assisted banks with a 4.7 billion dollar aid fund. But today they are leaving the countryside – which accounts for 63 percent of exports – on its own,” complained Carlos Pagliole of Santa Fe.

The protests have coincided with the start of the countdown to the October elections. “Farmers know the government won’t do anything until February,” admitted agricultural consultant Alejandro Ramirez.

Agricultural producers criticised measures announced last week by the Economy Ministry – designed to ward off this week’s protest – as “insufficient.”

The measures included a rescheduling of back taxes owed by farmers, reductions in interest rates on loans granted by state banks, and reduced tolls and lower fuel prices – but without concrete dates for implementation.

One by one, the various rural organisations rejected the measures, and accused the Economy Ministry of failing to understand the magnitude of the crisis hitting the sector.

The farmers want minimum prices to be set and guaranteed by the state, as well as a temporary moratorium on tax payments by farmers. “Small farmers need a minimal profit margin to pay their debts,” said Pagliole.

“The state which regulated agriculture has disappeared under the stabilisation model,” said the farmer. “The state does not understand that the countryside is a big consumer of products, from machinery to eatables, and that it is the first link of an economy.”

Pagliole pointed out that both the European Union and the United States subsidised their farmers, with the EU shelling out around 160 billion dollars a year in subsidies.

But although EU member governments believe in the need to subsidise an activity that without assistance would become unprofitable and unable to compete with countries where production is cheaper, they also want to see the subsidies reduced.