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ARGENTINA: FARMERS WANT GOV'T TO HELP BIG-TIME PROFITS GROW(English IPS News Via Thomson Dialog NewsEdge) BUENOS AIRES, Aug. 3, 2006 (IPS/GIN) -- In spite of the boom enjoyed by agriculture under the administration of President Nstor Kirchner, farmers, and especially cattle breeders, are the government's fiercest critics today. The agribusiness sector in Argentina opposes measures like taxes or restrictions on its exports, which it sees as a kind of punishment for its large profits. Farmers are also demanding long-term agricultural policies that will enable them to supply both the domestic and external markets. "In the 1990s, when unemployment was climbing, workers just wanted to hold onto their jobs. Now that the economy is bouncing back, they are demanding a raise. A similar phenomenon is happening with farmers," agronomist Jorge Elustondo, former vice president of the National Institute of Agricultural Technology, told IPS. Elustondo is the coordinator of the Agroindustrial Food Complex's Permanent Forum, which brings together rural producers, agribusiness companies, agronomists and other experts. The forum was the brainchild of the Grupo Fnix, a group of academics critical of the free-market, neoliberal policies that reigned supreme in the 1990s. Not even farmers deny that the countryside is better off today than in the 1990s. However, they argue that the government, instead of designing policies that would enable them to continue improving their situation, intervenes with disjointed measures that curb rural development. According to a study by the University of Buenos Aires Center for Development Research, profit margins in the countryside between 2002 and 2006 were double the 1990-1999 average, while earnings were 130 percent higher. The sharp devaluation of the Argentine peso in early 2002 and the rise in external and internal demand were key factors fueling the recovery of agriculture and the current boom. Despite new export taxes charged by the government, the fact that sales were in dollars and costs -- including debts -- were in a devalued local currency generated extraordinary earnings for the sector. "The clearest proof that profitability increased significantly was the rise in the value of land," said Elustondo. To illustrate, he pointed out that around Pergamino, a rural town in the province of Buenos Aires, the cost of farmland and pasture land rose from $1,000 to $2,500 per hectare. The analyst said the rise in land prices has not been connected to a broader real estate boom, but to the increased profitability of agriculture. For example, the same land that was leased for nine quintals (hundredweights) of soy in the 1990s is now leased for 17 tons of soy, which has become Argentina's leading export. "It's true that fuel prices are at the same level as they were in the 1990s, and the same is true for other costs, but it's also obvious that there is a total lack of coherent policies. The government intervenes, which is not a bad thing in and of itself, but it does it so poorly that it ends up providing a justification for the neoliberal policies that it is trying to combat," said Elustondo. The caretaker government of Eduardo Duhalde (2002-2003) imposed taxes on farm exports that were kept in place when Kirchner took office in 2003. In addition, the Kirchner administration adopted measures that upset farmers and agribusiness enterprises, especially over the past year. Last March, the government declared a ban on beef exports to curtail the rise in prices on the domestic market. As a result of that decision, which was loudly criticized by farmers, the price of beef on the hoof dropped 30 percent, while the retail price fell just 5 percent. Farmers complain that the measure has led to major losses for small producers while benefiting the middlemen more than consumers. The ban has since been partially lifted. In May, authorities were on the verge of adopting a similar ban on wheat exports, in order to curb prices of flour and bread, just when farmers were deciding what to plant. No ban was adopted, but the threat led to more fields being planted with soybeans instead of wheat. The government recently announced that an increase in export taxes on dairy products would be extended for two more months, which triggered the first nationwide agriculture strike against the Kirchner administration. During the July 22-26 strike, tens of thousands of ranchers stopped selling cattle, and held a number of assemblies. The measure was taken by the Confederaciones Rurales Argentinas (CRA), a coalition of agricultural associations that represents 110,000 farmers and ranchers. The CRA called the strike a success, stating that "The strong support by farmers was a reflection of the need for the government to implement proactive agricultural policies that would lead to sustainable, predictable and long-term development of the sector." The government accelerated the announcement of a new program titled "More Beef" to coincide with the strike. Through the program, the administration has earmarked $300 million to subsidize small and medium producers so they can increase beef production and profits over the next four years. But the announcement did not satisfy cattle farmers, who saw it as just another short-term measure that will only partly compensate for the damage caused to profit margins by export taxes. Not even the Federacin Agraria Argentina (FAA), which represents small farmers, backs the plan. "The lack of a national agricultural policy leads to the reduction and/or stagnation of production levels that makes it impossible to provide an adequate response to real needs, both in terms of domestic consumption and growing international demand," complained the FAA. The FAA pointed out that the monetary policies of the 1990s, when the peso was pegged to the dollar for a decade, represented a setback for the rural sector and the disappearance of more than 100,000 small farms. It also predicted that if the measures implemented in the last few months are kept in place, the result will be "similar to what happened last decade." |