Argentine Farmers Elated for ‘New Era’ After Election Runoff

  • Both candidates vow to end corn export tax, cut soybean levy
  • Some farmers may reassess their plans for planting crops

For the group of 60 farmers gathered in the town of General Pico in July, Argentine presidential hopeful Mauricio Macri’s pledge to end a widely opposed tax on corn exports was tempered by the knowledge that he was trailing in the polls.

The situation is very different after a surprisingly close presidential vote last week that forced a Nov. 22 runoff between Macri and Daniel Scioli, the candidate backed by President Cristina Fernandez de Kirchner.

The day after the vote, the General Pico farmers started calling the organizer of the meeting, Francisco Dadone, a local seed and fertilizer seller. They were “asking for corn-seed prices,” Dadone said. “Hope has arrived."

Macri is pledging not only to scrap the 23 percent levy on corn but also to reduce the 35 percent tax on soybeans. Scioli said Thursday he would do the same.

Argentine farmers have protested the taxes for several years, in part by holding back crops and storing them in silo bags that can be seen dotted along rural roads, as they wait for a new government and a change in policy. Fernandez, who unsuccessfully tried to increase the soybean export tax to 45 percent in 2008, has called farmers “greedy” and “anti-patriotic.” The country has shipped $17 billion of grains and oilseeds aboard so far this year, the lowest for the period since 2009, according to exporters’ consortium data.

Despite the decline in exports and the country’s other economic woes, Argentina remains a major agricultural power. It’s the world’s third-largest grower of soybeans and fourth-largest exporter of corn, and taxes on shipments of the commodities have been a vital source of income for Kirchner’s government. Argentina’s Central Bank received $27 billion of grain and oilseed export revenue last year, according to exporter group CIARA-CEC, an amount equal to the country’s currency reserves.

Buenos Aires Grains Exchange analysts Mariano Lopez, left and Esteban Copati, right check crops in a barley field.
Buenos Aires Grains Exchange analysts Mariano Lopez, left and Esteban Copati, right check crops in a barley field.
Photographer: Pablo Gonzalez/Bloomberg

The election may alter global crop supplies. Farmers planned to cut as much as 20 percent of the country’s corn planting area this season because of a lack of financing and soybean planting will be 1 percent lower, according to a Buenos Aires Grain Exchange forecast in September. But with changes to the export taxes increasingly likely, some crop producers are reviewing their plans. The exchange may revise its forecast after “such a change in mood," Esteban Copati, chief analyst at the grain exchange, said last week during a crop tour organized by the bourse.

“Farmers are finally feeling that a new era is arriving," said Leonardo Zino, an agriculture engineer who sells seeds and fertilizer in Trenque Lauqen, 440 kilometers (273 miles) west of Buenos Aires. "Farmers were devastated by years of government mistreatment. Now they are optimistic.”

That optimism can be seen in peso-denominated crop prices. Argentine futures for wheat, corn and soybean rose 9 percent, 6.2 percent and 4.6 percent respectively in the week that followed the election. Farmers sold $192 million of grain and oilseeds to exporters last week, the lowest amount for a five-day trading week this year.

There isn’t much time to decide whether to plant more. Once winter crops such as wheat or barley are harvested in late November or early December, farmers will plant summer crops such as soybeans or corn, or use fields for livestock.

While some farmers are getting excited, others aren’t getting carried away. It’s hard to trust Scioli because he’s tied to the government that imposed the taxes, said Miguel Lanz, an agriculture engineer and farmer in 30 de Agosto, a town in Buenos Aires province. and while Macri’s pledges sound promising, he must win to be able to enact them, he said.

“I will carefully hear what the candidates say before deciding,” said Dario Heck, a farmer and livestock producer in Eduardo Castex, La Pampa province.

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