Reuters / Argentine farm groups are threatening an agricultural sector strike if the government does not show signs of modifying policies that soybean, wheat and corn growers say are killing their profits.
Argentine President Cristina Fernandez’s allies took a beating in mid-term elections Oct. 27, shrinking her majority in Congress, ending chances of a constitutional change to allow her a third term and kicking off the contest to succeed her in 2015.
Adding to the political uncertainty in Latin America’s No. 3 economy, Fernandez had surgery last month to remove blood that had pooled on the surface of her brain after falling and knocking her head. The mid-term defeat could increase Fernandez’s vulnerability to a potential farm strike.
The grains sector has long objected to Fernandez’s interventionist policies, including export curbs on corn and wheat, meant to ensure ample domestic food supplies, and foreign exchange controls that have put U.S. dollars out of reach for most businesses and savers who shun the weakening local peso.
“There is no time to wait. We need to deepen our actions and if conditions are right call a farm strike,” Eduardo Buzzi, head of the Argentine Agrarian Federation, or FAA, told Reuters.
Growers also say their profits are being killed by the 35 per cent tax that the government puts on soybean exports while inflation, clocked by private analysts at 25 per cent, jacks up operating costs.
Buzzi’s federation, which represents small-scale growers, played a key role in the massive 2008 farm strike that shook the government of Fernandez, then in her first term. Prompted by a farm tax increase decreed by the fledgling president, the 2008 protest brought Argentine grains production to a halt.
The country is the world’s No. 1 exporter of soymeal animal feed and soyoil, used in the booming biofuels sector. Argentina is also the third-biggest global supplier of soybeans and corn.
Big farming companies are renting less land in the South American country and U.S.-based company Mosaic, one of the world’s top fertilizer manufacturers, is selling its local manufacturing site.
The pullout by Mosaic follows years of complaints by farmers about falling profits, which limits their ability to buy fertilizers and other inputs.
“If the government continues to ignore our complaints, a strike is sure to follow,” said Ruben Ferrero, head of the powerful Argentine Rural Federation, or CRA.
The U.S. Department of Agriculture forecasts Argentina’s 2013-14 soy crop at 53.5 million tonnes, with the South American country’s wheat harvest seen by the USDA at 12 million tonnes and corn at 26 million tonnes.