AGRICULTURE: Argentina’s Farmers Want Subsidies Too

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 28 1999 (IPS) - Farmers in Argentina are asking the new government of President Fernando de la Rúa for subsidies to enable them to weather the crisis triggered by the slump in commodity prices and compete with heavily subsidised exports from industrialised countries.

Farmers are confident that they will obtain aid, as the new administration that took office Dec 10 believes it unlikely that the United States, European Union and Japan will stop subsidising agricultural production in the short to medium-term.

Foreign Minister Adalberto Rodríguez Giavarini confirmed Argentina’s commitment to free trade, and said the country’s exports could grow by more than one additional percentage point a year if existing distortions – such as farm subsidies in developed countries – were eliminated.

The elimination of State assistance in the past 10 years and the inavailability of soft credit for farmers have had a heavy impact on small and medium-sized rural producers in Argentina, especially since 1996, when prices began to slide as a consequence of the global financial crisis.

“The countryside is bankrupt,” Agriculture Secretary Antonio Berhongaray said on assuming his post this month. The rural sector owes banks and other creditors a total of 10 billion dollars, 50 percent more than in 1991.

In his first few days in his new post, Berhongaray announced several measures applauded by farmers, such as a 90-day suspension on foreclosures, and the availability of loans enabling producers to hold onto their wheat until prices go up.

Berhongaray also promised to hold monthly meetings with farmers to follow developments in the sector more closely.

Associations of large and small farmers and agricultural cooperatives expressed their confidence that the government of De la Rúa would mark the start of a phase of recovery for the agricultural sector.

“We must not be afraid of the word ‘subsidy’,” said Valentín Levisman, with Coninagro, the organisation linking farmers’ cooperatives, after his first meeting with Berhongaray.

Daniel Bo, with the Argentine Agrarian Federation, said his organisation never believed in free trade, and always considered assistance for the rural sector necessary.

“Until the United States, European Union and Japan eliminate subsidies, which absorb around 300 billion dollars a year, our trade cannot be totally opened up to competition,” he told IPS.

The Federation, comprised of small farmers, is working on a project to subsidise dairy farmers, who next year will be allowed to sell their products at prices below cost, and on a project for sugar producers, who have been in crisis since they lost State assistance.

“The active policies that until a short while ago were disparaged are coming up for discussion again,” economic columnist Carlos Abalo wrote in the Buenos Aires daily ‘El Cronista’, referring to farm subsidies and the “fiasco” of the Seattle conference.

The trade ministers of the 134 member countries of the World Trade Organisation (WTO) met early this month in that US port city, where they failed to agree on a working agenda for a new round of multilateral trade talks to set the rules of the game for global trade over the next few years.

“The failure of the WTO third ministerial conference meant an extension of the life of farm subsidies, and even less chances for countries whose exports are basically comprised of rural products to open themselves up to global trade,” wrote Abalo.

Farmers point out that there are various forms of aid for the rural sector, such as subsidies for production or exports, soft loans, tax returns on exports, cuts in interest rates, or government compensation for price slumps.

Levisman pointed out that the coming grain harvest, which analysts say could set a new record of nearly 70 million tonnes, would nevertheless be a flop for farmers due to their inability to compete if aid were not made available to allow them to make a profit even at a time of low prices.

The problem, according to Abalo, is that while protectionism is costly but possible for industrialised countries, developing nations like Argentina cannot even afford to subsidise agriculture.

The new government, although it has committed itself to correcting the imbalance in Argentina’s public accounts, has also expressed its determination to pull the agricultural sector out of its hard-hitting crisis, ward off foreclosures and stem the rural exodus.

For starters, the new authorities have made themselves available for what is to be an ongoing dialogue, which the rural sector has described as promising.