Argentina has often been described as the bread basket of the Southern Cone, with plenty of fertile land for grains and cattle.Yet with world food prices soaring, soy critics worry about Argentina’s ability to feed its own people at affordable prices.
Argentina has often been described as the bread basket of the Southern Cone, with plenty of fertile land for grains and cattle. In fact, the economy is based on agro-exports. But with soy production taking over massive tracks of land, producing food crops for domestic consumption has become an increasing challenge for the resource rich South American nation. With world food prices soaring, soy critics worry about Argentina’s ability to feed its own people at affordable prices.
The debate over soy has riveted the country, and has proven to be a major crisis for the first woman elected president of Argentina, Cristina Kirchner. The president’s decision to increase the export tax on soy has been in the eye of the storm.
Crippling Farmers’ Strike
The government implemented a tax on soy exports at a rate of 45%, up from 35% in early March. Farmers became angry and went on strike. For more than 20 days the nation-wide farmers’ strike paralyzed food deliveries. The strikers, demanding that the government roll back the tax hike, threw the country into turmoil for much of March. Supermarket shelves were scarce and meat coolers in butcher shops were completely empty for nearly two weeks. The strike had almost entirely blocked food supplies from being delivered to Buenos Aires, the nation’s capital. Farmers finally suspended the strike for 30 days in late March to facilitate negotiations with the government. Had the strike continued, city residents could have further suffered from real food shortages and skyrocketing prices.
Global soy prices have soared in recent years, making the agro sector the nation’s most profitable. Cristina Kirchner’s soy export tax is a policy carried over from her husband, former president Nestor Kirchner, who upped the tax to 35% as an emergency measure to revive the economy after the 2001 crisis. According to political economist Atilio Boron, the tax hike hit small farmers while large land owners could afford to move production to more lucrative nations like Brazil. Boron says the tax hike was uncalled for: "The country is not in an emergency. Argentina has a strong financial base, more than 50 billion dollars in liquid reserves in the central bank, which is a lot. The taxes are still going on."
In response to the farmers’ strike, president Kirchner has vowed not to back down on the tax hike. This is the biggest conflict so far in president Kirchner’s first 100 days in office, especially after upper-middle class citizens poured into the streets of Buenos Aires banging pots and pans in opposition to the president and in support of the farmers. Feeling pressured from the opposition, Kirchner held a massive pro-government rally in downtown Buenos Aires. She slammed the farmers, accusing them of destabilizing the economy and social order.
The farmers were enraged at Kirchner’s attacks against soy producers. "Most people blockading the highways were people who make their living with a lot of effort, hard work and sacrifice, it is unfair to tax the little guy," explains Boron. How much money has the soy tax made? In 2006 with the 35% tax, the government collected $11 billion in soy taxes.
On the farmers’ side, small and mid-sized agro producers organized the blockades in what they said was a reaction to a tax that was the straw that broke the camel’s back. The tax hike is hammering small farmers, who have had increased costs in fertilizers and fuel. In an unusual pact, the large land owners allied with small farmers during the farmers’ strike. These two sectors have historically despised each other.
Along the nation’s highways, soy farmers stopped trucks transporting food goods from arriving to market. However, large land owners which own more than 500 hectares of land were not the leading protagonists in the barricades. Small farmers who control only 20% of Argentina’s agro production made the farmers’ plight a national conflict.
Hector Bitonte is one of those farmers who blocked a major highway leading from the nation’s grain harvesting cradle to Buenos Aires. He says that the new 44% tax is unfair for small farmers already struggling with increased costs in soy production. "I was hurt by the food that was thrown out due to the blockade. It’s bad for the country. The strike is a hard action to take — but how many years have we suffered tax increases? The latest tax was the last straw. Either we disappear as farmers or we take this action to see if the government reacts with policies in favor of small farmers."
Soy, Rising Inflation and Food Prices
Argentina is a leading producer of soy and grains at the global level, trailing the United States and Brazil as leading soy producers. In 2006, Argentina produced more than 47 million tons of soy. Top soil erosion and pollution caused from pesticides and fertilizers have been just some of the side effects to soybean plantations which have expanded exponentially at a rate of 10% annually. More than 550,000 acres of forest land are cleared each year for soy production. The situation is so severe that the National Agro Tech Institute studies predict that in 10 years 70% of Argentine land will become desert.
Economists worry that mono-crop production like soy for plant-based fuels and feed will cause food prices to soar in Argentina, where food inflation continues to rise over 15% annually. During the strike, millions of liters of milk were dumped and millions of chicks were drowned for lack of chicken feed. The strike has had a significant impact on the prices on many goods like meat, chicken, vegetables, and dairy products. Consumers may have to pay high prices on these products for months to come. The strike may also have sparked inflation, which was already rapidly rising. The government’s official inflation rate is 10%, but independent analysts put the rate at 20%.
Cristina Kirchner thought it would be easy to target large soy producers who historically have been characterized as detested oligarchs. Unlike other parts of Latin America, farming is high tech in Argentina, mostly mechanized and creating few jobs. Kirchner claimed that the commodity boom can be used to redistribute wealth to Argentina’s eight million poor. She also raised concerns over Argentina’s ability to feed its people, the environmental effects of soy and checking inflation on food products.
Could the farmers’ conflict be a warning sign that Argentina could be poised for a food crisis? Even the International Monetary Fund is beginning to plead governments to "tackle the extremely serious" problem before wars are triggered over food shortages. With riots in Haiti, violent bread lines in Egypt, tortilla wars in Mexico and severe shortages in Zimbabwe, the world must brace itself for a culminating global food crisis.
In Argentina, there is rising alarm over the cost of food and the depleting supply of domestically produced food stuffs. The production of Argentina’s famous beef has plummeted in recent years. Many producers simply see soy farming as more profitable and lucrative, especially as speculations over global prices continue to increase due to the biofuels market. Grain production for biofuels could make the world wide price of food skyrocket 76% by 2020. More than 90% of Argentina’s soy is exported. Argentines do not eat soy, and as the production of meat, milk and vegetables continues to decline, the likelihood of a major food crisis in Argentina grows.
Marie Trigona is a writer, radio producer and filmmaker based in Buenos Aires. She can be reached at email@example.com. Photo by Trigona.