Argentina, Part Four: Trying to Escape its Past

This Business of Farming

Argentina is an Ag powerhouse that is often at odds with its own government - and history

Published on: October 8, 2013

In this fourth and final installment of my series on Argentina, I've realized there is no way to truly sum up a nation like this with a few blogs from a fleeting trip. The people, food and culture are wonderful. The farmers are savvy businessmen. What's not to love, right?

You must appreciate Argentina's past to really get a sense of what this country is up against if it expects to succeed in an increasingly globalized agricultural world.

Argentina was one of the richest countries of the world in the late 19th century, but today half of its population lives below the poverty line. Past military juntas, strikes and, most of all, political mismanagement, have resulted in a country that seems to teeter on economic collapse on a daily basis.

Argentina dairy farmer Francisco Mihura: "In the ten years of this government they cannot solve the most basic of problems, and we still have two more years to go," he says.
Argentina dairy farmer Francisco Mihura: "In the ten years of this government they cannot solve the most basic of problems, and we still have two more years to go," he says.

It can't seem to get away from this past, either. Politically it is still obsessed with Juan Peron, the army general who came to power after WWII and whose colorful wife Evita was the champion of the working class.

Politically and economically, Latin America is very different from Europe or America. But sociologically,

Argentina is in another universe - even compared to other Latin American countries.

Argentines tend to value political personalities and sentiment over government and economic institutions. This was explained to me the last time I came here eight years ago by Vicente Massot, executive director of the Newspaper La Nueva Provincia. He is also a professor and holds a PhD in political sciences.

"Wherever you have weak institutions, political upheaval is a problem," says Massot. "We have a constitution and laws of course, but they are always subordinated to the president. Countries with weak institutions tend to be governed by providential men, who can be honest or dishonest, leading good governments or bad, but they can do so because we have weak institutions, in either case."

If the country's politics seem schizophrenic, you can trace it back to Peron and the political movement that dominated this country in the past 70 years.

"Peronism has been the most powerful, important movement in Argentine politics since it was created in 1945," Massot says. "Peronism is a difficult movement to explain ideologically. In the extreme left, the people who call themselves Peronists are basically Marxist; but on the right, people who are fascist will also define themselves as Peronists. There is no other example in the world."

The other problem here, says Massot, is a very tolerant society. "It's hard to get society to react against bad things," he says. "The president, if he is very powerful, can do absolutely anything, and I'm not exaggerating."

Cristina Kirschner's presidency has been mired in controversy since taking over for her husband in 2005. The agricultural sector has been hard hit by her export tax policy. The government will put a high tax on wheat exports to keep local bread prices down for the population. The logical result? Farmers stop growing wheat, and bread prices go up.

According to stories we heard in Argentina, if you want to export you have to go to the government with an outline of a deal and have them approve it. No one knows if the deal will go through unless you hand that government official a wad of cash. You pay somebody to look the other way.

This story was told by a farmer who has 12,000 acres. They hate the government here, but apparently you have to do these things in order to survive.

Eliminate export taxes and the country becomes an export juggernaut. As in the case of the U.S., thriving exports will only motivate farmers to produce more, lowering all prices for everyone. A rising tide lifts all boats; this is not rocket science.

Argentina certainly has the potential for huge growth… if it can only get out of its own way.

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