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ECONOMY | 09-01-2021 07:37

Amid tension, Farming groups call three-day halt to grain trading

Three-day stoppage next week called by three of four main agricultural groups to protest suspension of maize exports.

As last year drew to a close, a strike by soy-crushing workers that had lasted most of December, crippling agro-industrial exports was settled. This week, world soy prices topped US$500 per ton – the highest since 2014. However, a new cloud now looms on the rural horizon over another crop – a farm stoppage next week against the suspension of maize exports.

Three of Argentina’s four main farm groupings decided Tuesday to halt grain marketing for the first three days of the coming week, to protest the Alberto Fernández administration's decision to suspend maize exports until March in order to ensure sufficient domestic supplies.

The odd man out was the Coninagro cooperative organisation, which shared the general critique of the export suspension but said in a statement that "all channels of dialogue should be exhausted" with the government before resorting to strikes. 

The farming leaders huddled for several hours on both Monday and Tuesday before reaching their decision.

This week’s Chicago soy prices could net the country up to an extra US$5 billion this year, although the levels would not be so high in the first place if there were not a drought in both Argentina and Brazil, which experts believe could restrict export volumes. Within the past month projections for the next soy harvest have already fallen from 50 to 46 million tons, pushing prices up.

Yet in the medium term the upward price trend is expected to continue because the excess liquidity worldwide to counter the coronavirus pandemic is increasingly being channelled into such commodities, rather than a weak dollar. 

Hard currency

In the framework of a prolonged recession aggravated by the coronavirus pandemic, Argentina depends on its farm exports to obtain hard currency.
Argentina is the world’s third-biggest maize exporter after the United States and Brazil, with its 2018-2019 harvest reaching a record 51.5 million tons in sales abroad.

The Agriculture, Fisheries and Livestock Ministry defended its corn export curb by saying the decision was based “on the need to assure grain supplies for the sectors which use them as their raw material for their processes of transformation, basically the production of animal protein such as pork, chicken, eggs, milk and feedlot beef where cereals represent a significant component of their costs of production." 

The Mesa de Enlace roundtable, linking up the four farm groupings, issued a communiqué rejecting the government’s move as "a measure absolutely harmful for agriculture and Argentina as a whole."

The decision was also criticised on a much broader front by the multi-sectorial Consejo Agroindustrial Argentino (CAA), formed by 57 organisations, which argued that "shutting down exports is the worst way of stopping inflation or guaranteeing food security." It described the move as “worrying” and “surprising,” and urged the president to enter into “dialogue.”

According to the authorities, up to December 30 (when the suspension was announced) the export of 34.23 million tons of maize from the  2019-2020 harvest had been authorised or 89 percent of the total 38.5 million tons left over for export.

"For once the farm export sectors should start thinking of other Argentines. These soy sectors have had extraordinary profits," Public Works Minister Gabriel Katopodis told the El Destape radio station after the  protest had been announced.

‘Dialogue and work’

The letter, signed by CAA spokesman José Martins, the president of the Grain Exchange, said: "The CAA is aware of the socio-economic crisis which we are undergoing and firmly committed to dialogue in order to, propose, implement and communicate public policies responding to this profound crisis. The high inflation, which continues destroying purchasing-power and the consumer market also affects us and keeps us busy, as does a pandemic which impacts all economic activities, including agriculture. In this respect, the measure taken by the government does not respond to our proposal of dialogue and work." 

The letter then went on to say: "Over the last two months we have held 25 meetings with the teams of the Economy and Productive Development Ministries, AFIP tax bureau, the Customs (Aduana) and SENASA food health authority among others, advancing in a bill to generate conditions for agro-industrial investment for the next 10 years. We are working to set the bases for national take-off with a stake in investing, creating jobs, producing and exporting throughout the country. Nevertheless, the measure implemented is contrary to those aims and will not produce a positive effect."

In this aspect the CAA remarked: "It’s indispensable to return to dialogue and effective work, urgently removing any measure which works against production and exports, considering that to intervene markets is to destroy production, employment, investments, and the consumer and export markets, doing more to promote uncertainty than to have any effect on inflation and food security. We’re open to seeking other mechanisms for meeting the needs to fight inflation and supply the local market. This is in our own interest because we are the first to be hurt when we Argentines suffer problems of food security and high prices. We won’t underwrite measures of that nature. The way ahead is not arbitrary decisions ignoring our socio-economic realities. We insist on placing the focus on public policies which foment production, investment, employment, consumption and exports."

"Let us not waste the effort of agriculture to be united in the common objective of an agro-industrial, federal, inclusive, technological and export-led Argentina which would once again be the motor for putting us all back on our feet," the CAA letter concludes.

‘Very aggressive’

Rural Society president Daniel Pelegrina described the block on corn exports as “a very negative measure for agriculture, joining other equally harmful announcements throughout 2020.”

“We farmers are the target of a very aggressive policy towards the sector and we feel the need to express our rejection and discontent," he added.

 Next week’s strike has already been preceded by spontaneous assemblies of farmers nationwide to reject the export curb. “We must set limits to the government,” concluded one such assembly in Bell Ville, Córdoba.

Matías de Velazco, the president of Carbap, argued: "If they want to control corn prices, they’re going to rise without a doubt. Farmers have no patience with this kind of Kirchnerite measures, which form part of a past which must not return."



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