Agricultural crisis rocks Argentina

July 12, 2008

A recent move by the government of President Cristina Fernandez de Kirchner to implement a system of variable taxes on agricultural exports has opened up a crisis that has lasted more than 100 days.

Along with provoking an extraordinary response from the different organisations that represent small, medium and large agricultural producers, the move has put the government on the back foot and opened up a political discussion in the country not seen since the days of 2001 economic crisis and subsequent uprising, the Argentinazo, that overthrew several presidents in less than a week.

On March 11, the government decided to implement a system of taxes on soya exports. This system was designed with varying rates to be applied on the basis of world prices at a time of spiralling global food prices.

Argentina is one of the largest food producers in the world, particular of meat, grains and soya. Studies from the United Nations Food and Agriculture Organisation say that in normal conditions, Argentina, with a population of around 30 million, can produce enough to feed up to 410 million people. Yet in Argentina there are more than 3.5 millions of indigents that do not have enough food everyday, whilst five major transnationals control over 80% of world grain production.

The current world food crisis could provide Argentina with an opportunity to take advantage of the high prices to accelerate economic growth and redistribute wealth, as well as promote national economic development — as Venezuela has done in regards to oil production.

Venezuelan President Hugo Chavez's government, having taken control of the state oil company and utilising the high world oil prices, has used wealth generated from this sector to tackle poverty through health and education social missions, among others, as well as expanded industrial development.

Government versus countryside?

Instead, we are witnessing an incredible battle for control over land rent between the government and rural producers. For the protagonists and the corporate press, the dispute is reduced to a simple dichotomy: government or countryside?

To truly understand the situation it is necessary to look deeper and understand where the dispute came from, who the real actors are and who will be the victims regardless of who wins the war.

What we are witnessing is a lockout on the part of the producers and related industries, with road blockades, strikes and urban demonstrations with pots and pans, commonly known as cacelorazos. This has created an enormous crisis provoking food shortages, contributing to rising inflation, mass firings, and even the destruction of basic food produce.

The total incapacity of the government to stop this has enticed the agro-producers to step up their demands and insist on the elimination of all tax increases.

But who are these producers?

The transformation of large parts of Argentina's countryside towards soya production has dramatically modified the rural landscape. Grain production has been gradually replaced by a mono-production and an increased wealth concentration in the hands of soya producers.

Today, three sectors control the highly profitable soya sector. Firstly, there are the contractors, who are basically investment funds that rent land for soya production. Secondly, the suppliers of agrochemicals and seeds: multinationals like Monsanto, DuPont and Bayer.

Thirdly, the five big exporting companies who control 90% of exports and generate more than US$ 1 billion profits per year. These companies — Cargill, Bunge, Dreyfuss, Nidera and AGD — handle the entire production chain including silos, transport, ports and mills.

As well as this, there are the financial companies that control the futures markets.

What's left are the small land owners, small producers, the middle class in rural towns and subcontractors who do the dirty work. This is the true face of the modern Argentinian countryside.

On the other side stands the government, which needs more money to keep paying its external debt and to assist Argentinian industrial capital to survive against ever increasing competition in the world market, particularly from Brazil. In more recent times, the government has "discovered" that they also need the money from the taxes to build more houses, hospitals and schools.

Neoliberalism vs neo-development

As the dispute has dragged on, it has impacted widely on the political situation. What started as an economic dispute over land rent has become a political battle for the future.

Following government concessions, including payment of compensations, a lowering of the taxes and more freedom to export meat and wheat, the position of the "countryside" has remained unchanged. What is becoming apparent is what they really want a return to the pre-2001 neoliberal period, defeated by the people's revolt.

This is expressed in the support given by the right-wing parties destroyed by the Argentinazo to the protest actions. This sector, along with questioning taxes, has been appealing to urban middle classes in order to turn them against the workers, particularly the poor.

They have drawn a sharp contrast between the skin colour of the light skinned road blockaders and those of the piqueteros — the unemployed workers who have staged road blockades in demand of work and unemployment benefits.

The government is in a bind. It supported the increased concentration of soya production through its agricultural policies, explaining why some of the producers supported Fernandez in her election campaign. Also, the small and medium producers — who made up a key component of Fernandez's voting base in the 2007 elections — have aligned themselves completely with the large agricultural capitalists, placing all the blame for the crisis on the government.

The government has been incapable of generating sympathy among the urban middle class and workers because previous policies, such as opposition to wages increases and little-to-no wealth redistribution. Instead, it has been increasingly forced to rely on the clientalist networks of the corrupt Justicialist party, the traditional party of peronism, in order to stage rallies in its defence.

A way out

There is a third path that could be taken in this conflict.

A number of union leaders, intellectuals, human rights and community activists, and progressives of different origin — all concerned by the growing offensive by the neoliberal right but opposed to the current course of the government — have begun to organise themselves. They believe that it is not possible to be neutral in this dispute.

In this context, while opposing actions of the neoliberal right, they have put forward an alternative project to that of the government based on an agrarian plan to stop the domination of soya, to regain crop diversity and ensure food sovereignty and cheap primary products.

This means aiding small farmers, guaranteeing their land, protecting the environment and elaborating a policy for public ownership of supplies. A tax system based on the size of exports (to place the biggest burden of the taxes on the largest producers) is also essential, along with the regulation of foreign trade.

Rather than a simple regulator redistributing the rent between the different sectors of the dominant class, the state should aim towards control and commercialisation of agricultural production. This means the nationalisation of sectors of the agricultural industry.

They have also raised the plight of the forgotten sector: the almost one million rural peons, mostly in the informal sector, who are regulated by a law enacted by the military junta in the '70s. Any solution to the land question has to incorporate this sector, starting with the repeal of the law.

Instead of taking any of these steps, the Fernandez government has sent a to parliament supporting the retentions. This is another manoeuvre, given that congress is controlled by the Justicialist party. So far it has already been approved by the chamber of deputies, while the chamber of senators is set to discuss the law on July 16.

In Argentina, the land has been the primary generator of wealth, often at expense of any project for national industrialisation. Historically, the land owners have controlled the country. The only way to change this and overcome the crisis would be through the implementation of a popular program of land transformation, backed by social mobilisation.

In this sense, the recent events have created an interesting side effect. The rural dispute has legitimatised direct action methods so heavily criticised by the corporate media and previous governments, even if this time it is not the piqueteros but other social sectors.

Together with the big political discussion perforating Argentine society, this could help contribute to a new wave of social struggle.

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