Argentine flags waved at the windows, Saturday, April 23, tractors flocked to May Square in Buenos Aires, the epicenter of protests and power, with the presidential palace on its edge. This spontaneous demonstration, not overseen by the main agricultural organizations in the country, aimed to express the rejection of the policy of the government of Alberto Fernandez (center left) and the concerns of certain producers.
“We are not ready to continue financing the rope with which we are being hanged (…). Spend less, do with what you have or find another occupation”, said in particular the text of the demonstrators, addressed to the government and distributed to the press, tinged with a clear political tone. The gathering thus quickly took on the air of anti-government rallying, reviving the historical tensions that characterize relations between the field (agricultural sector) with Peronist management (left). ” The campo seeks to work, export and produce more. We are always going to be on the side of work”said in particular Horacio Larreta, the head of government of Buenos Aires (center right), who participated in the demonstration.
A pillar of the national economic model, the agricultural sector, intensive and exporting, was the source of nearly 70% of the currencies entering the country in 2021, according to the Rosario Commodity Exchange. A precious windfall, while the country, in lack of foreign currency, must face the repayment of its debt vis-à-vis the International Monetary Fund – amounting to 45 billion dollars (about 42 billion euros), restructured on March 25 – but also from its private creditors.
Boomerang effect
Why so much tension, while the price of cereals, at the highest level internationally due to the war in Ukraine, suggests an unexpected windfall? “Argentina has the unique opportunity to be a major global supplier, but, paradoxically, the grain sector is not certain to take advantage of rising prices”, observes Juan Manuel Garzon, economist at the Institute for Argentine and Latin American Reality Studies. At the root of all evil, once again, inflation. The jump in the cost of fuel, labor – with wages that more or less follow the rise in prices – but above all of fertilizers, the price of which has been multiplied by three, explain the battered margins. In March, inflation reached 55% over one year.
The dual exchange rate, with an official reference, controlled by the government, and a parallel rate – the cursor which corresponds to the evaluation of the actors of the economy – still confuses the calculations of the sector. Result: sales lock in at one dollar for 114 pesos, the official rate, while suppliers are guided by one dollar for 200 pesos, mechanically raising internal prices, often calibrated on the dollar.
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