Federico Zerboni gazes out from his 4x4 as it rumbles across the pampas, fertile fields of rapeseed and soybean visible as far as the eye can see.
An agri-business boom in Argentina, fuelled largely by soybean and grain exports, has helped offset some of the pain of a bitter recession that forced Mauricio Macri to call on the International Monetary Fund for a US$56-billion bail-out.
Zerboni, 53, says his 6,000-hectare (14,800-acre) farm – and hundreds like it in the interior of the country –hold the key to economic recovery.
“It will be key for the recovery of the country. Other countries have oil, but Argentina depends on its agricultural production,” he said.
But Macri, whose government now has to dance to the IMF’s tune, has angered some farmers by performing a major U-turn on one of his signature policies, cutting grain export taxes.
After steadily whittling down taxes in a bid to boost exports, the market-friendly president slapped a 10-percent tax on exporters’ earnings in the last budget as a much-needed revenue-generating measure.
Gustavo Grobocopatel, Argentina’s so-called “Soy King” and chief of the Los Grobo agro-industry giant, calls the tax a “distortion.”
The grain crop highlights “Argentina’s dependence on agriculture,” said economist Rodolfo Santangelo, as it accounts for some 50 percent of the foreign currency flowing into the country.
Argentina, the world’s eighth-largest country, is the world’s foremost producer of soybean flour and soybean oil.
“Results in the agricultural sector have a knock-on effect on the rest of the economy,” said Santangelo. “We don’t feel it so much in the capital and the metropolitan area, but in the interior of the country.”
The export tax may be the price to pay for having a friendly centre-right government in place, especially for exporters who have experienced the Peronist alternative, but farmers have a limit to their patience.
“We understand the recent measures taken by the government as reasonable to stabilise the exchange rate... but we are concerned about the effects of these measures” in the longer term, said Gustavo Idigoras, president of the Centre of Export Cereals (Centro Exportador de Cereales, CEC).
“It’s essential the government reverses those measures as soon as possible,” he warned. “Because if not, investment levels in Argentina next year will be very low. That’s why we’re worried about the recession.”