Argentine Farmers Protest Economic Environment

Farm leaders say another strike is possible.

Published on: Aug 19, 2008

A large rally of Argentine farmers was held Monday, protesting economic hardships that are being placed on the agriculture sector. Leaders of the Argentine Agrarian Federation, which staged the rally, have threatened another strike citing continued restrictions on exports for a variety of agricultural products, rising costs for fertilizer and land rents, low and controlled domestic prices, and an exchange rate that strengthened while international soy prices dropped.

Farmer strikes earlier this year crippled transportation and the economy. The strikes were in response to the sliding scale export tax on soybeans that was enacted by Argentina's president. The strikes forced ratification of the tax by Congress, and while passing the House it was defeated in the Senate, thereby returning the export tax on soybeans to 35%.

Farm Progress market analyst Arlan Suderman says from a soybean market standpoint as Argentina approaches planting season with decisions that need to be made this is poor timing of a possible strike that might disrupt the supply of soybeans.

"Now the U.S. is going to have supplies coming online to meet world need here over the next month," Suderman says. "But our crop lacks maturity and we have very limited supplies of old crop available should Argentine farmers go back on strike."

USDA is anticipating an increase in Argentine soybean acres when farmers begin planting in a few months, which Suderman says is essential because Brazil is pulling back on its planting intentions for next year and the U.S. is facing quite an acreage battle this spring.

"If they resume a strike, it will further erode confidence in the global market in doing business with Argentina," Suderman says. "We've seen this in the United States previous times when we issued embargos and it took a long time for countries to be willing to do business with us again. A lot of countries became wary of doing business with Argentina earlier this year and the business was just starting to go back to them. If they would resume a strike now, it would certainly hurt business once again and further erode that confidence, which would be bullish for demand for U.S. soybeans."