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Argentina Agribusiness Report Q4 2009Published by: Business Monitor International Published: Sep. 24, 2009 - 55 Pages Table of Contents
AbstractThe drawn out conflict between the Argentinian government and the country's farmers flared up again inmid-2009 as the government vetoed a law that would have exempted drought-hit farmers in Buenos Airesprovince from export taxes on their produce. At the time of writing, farmers were again preparing to goon strike.At the beginning of Q3, relations between the agricultural sector and the government seemed to beimproving. In August the government eased restrictions on exports of beef. The proportion of stockcapacity meatpackers are required to sell to the domestic market has been reduced from 65% to 35% andhas been eliminated entirely on prime cuts. An emergency law passed in the quarter has also provided taxbreaks and subsidies for farmers hit by the drought. In late August, however, President Cristina Fernándezde Kirchner vetoed part of the law calling for export taxes to be waived claiming it had been included bymistake and was unworkable. Relations between farmers and the government have been strained since 2002 when the governmentimposed export levies on agricultural commodities in the wake of the country's financial meltdown. InMarch 2008, the situation boiled over when the government tried to introduce a sliding scale for exportlevies on soybeans. The ensuing strikes by farmers severely disrupted the country's agricultural sector. In2008, when the price for agricultural commodities was surging and Argentina was producing bumpercrops of grain and soybean the taxes were painful enough. Now with crops being devastated by the longdrought that has gripped Argentina this year, many farmers will see their profits disappear. For farmers to recover from the crisis it is essential that an accord with the government can be reachedthat will allow profits for farmers to rise while still providing affordable food supplies for domesticconsumers hit by recession. Compromises will be needed on both sides. With relations falling so low thatthe government has accused farmers of being complicit in the the bloody rule of the military junta that ranArgentina through the 1970s, this will not be easy. Many farmers are hoping that the government's Junedefeat in mid-term elections for the lower house will see a Congress that is more open to listen to theircomplaints when the new lawmakers take their seats in December. News on the production front became bleaker and bleaker through mid-2009. The continued drought hasnow seriously disrupted planting for the 2010 crop and we have revised down our forecasts for productionof corn and wheat. After an expected two consecutive years of disastrous harvests, Argentina's wheatexports are likely to all but disappear next year. Perhaps more worrying for the average Argentinianconsumer is the impact the drought could have on the livestock sector. With the national herd falling asthe pampas dries out and farmers draw down their stocks, Argentinians could soon be forced to eatimported meat. Get Full Details About This Report >> |
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