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Argentine farmers are ready to confront the government as they prepare for a nine-day strike, starting on Thursday, to protest the suspension of monthly beef exports aimed at controlling rising inflation.
Beef prices in the country have doubled in the last year, fueling annual inflation at 46 per cent. Officials are concerned that lower domestic consumption as a result of higher prices in one of the world’s top exporting cows could hurt the government’s reputation ahead of this year’s crucial midterm elections.
The export ban was announced on Monday, although it has not yet been made official. It aims to increase domestic supply to ease the pressure on local prices, with inflation over 17 months President of Alberto Fernández Bigger than any other president since the last hyperinflation crisis in Argentina in 1989.
Farmers blame it to a greater extent okela due to rising costs, not only locally — especially for transportation — but also in the growing international market for grain used to feed livestock. But a ban on exports will force the government to abandon foreign currency from a sector that had $ 3.4 billion worth of exports last year, while net central bank liquid reserves are lost to zero.
“They are firing on foot,” said a major cow exporter, fearing more reliable suppliers that large customers in China and Europe could look elsewhere, such as competitors from Uruguay, Paraguay or Brazil, especially if the measure was extended, as feared. “After this tragic mistake, winning the market will be very hard, and it will mean selling at a lower price.”
The meat exported to Argentina is also different from what is sold locally, because the larger the animals that are fattened with the grains, the more expensive they are to produce. This product will have to be sold at a big discount in the local market, according to the producers.
Some fear a repeat of the 2008 agricultural strikes, triggered by similar interventionist policies imposed by then-president Cristina Fernandez de Kirchner. Powerful vice president of Argentina. Exports also fell by half and domestic livestock fell by 20%. Many meat packers also boasted and 12,000 workers in the industry lost their jobs. Although part of the industry has since reopened, it is still heavily indebted.
“The problem is that you lower prices in the short term – that will happen – but it has a very high cost in terms of production, employment and exports. And along the way there will be higher prices,” said local economist Marcos Buscaglia, who explained that prices will rise again in Argentina when the stock of cattle is replenished or.
Kezia McKeague, director of consulting at McLarty Associates, said the measure will do more harm to Argentina’s international reputation and the export-oriented agricultural sector. Already, capital controls, import cuts and price freezes are making businesses in some sectors increasingly sustainable, forcing some companies to leave the country.
“While the impact of high inflation rates is devastating for the average citizen, the decision to sacrifice Argentina’s core exports is more about short-term political goals than any economic logic in the mid-term election year,” he said. Despite Argentina’s “famous unpredictability” of economic policy, governments on both sides of the political spectrum have promoted the need to increase the country’s export capacity, which remains low compared to gross domestic product.
Agricultural products make up about half of all exports, of which about 5% are meat, after recovering significantly since the end of Fernández de Kirchner’s presidency in 2015. But the consumption of Argentine meat, because juicy steaks have a special place in the local culture. , has decreased, falling below the annual average of 50 kg per person in 2009 after reaching almost 60 kg.
Many farmers were already angry with Fernandez’s government, which has compressed profit margins tremendously by raising export taxes and forced profits to be converted into foreign currency at a huge discount.
This unrest has raised concerns about the recovery of the 2008 riots with farmers, which led to Fernandez ceasing to be head of the cabinet in his time. “The government is repeating the same mistake it made 13 years ago and the results will be bad or worse,” the cow exporter said.
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