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Argentine farmers are preparing to have a showdown with the government in a nine-day strike that began on Thursday to protest the month-long suspension of beef exports aimed at curbing inflation.
The price of beef in the country has doubled in the past year, exacerbating inflation, with an annual inflation rate of 46%. Officials worry that rising prices in one of the world’s largest beef exporters will lead to a decline in domestic consumption, which could damage the government’s reputation before the midterm elections to be held later this year.
The export ban was first announced on Monday, but it has not yet been officially issued.The aim is to increase domestic supply to ease the pressure on local prices and inflation during the 17-month period in 2008 Alberto Fernández as president Since the last hyperinflation crisis in Argentina in 1989, this number has been higher than any other president in the same period.
Farmers owe much to higher beef The price increase is not only because of the increase in local costs-especially transportation costs-but also because of the booming international grain market for cattle breeding. But the export ban will force the government to abandon much-needed foreign exchange. The sector’s exports last year were US$3.4 billion, and the central bank’s net liquidity reserves were almost close to zero.
A major beef exporter said: “They are shooting in their own feet.” He worried that large Chinese and European customers might look for more reliable suppliers elsewhere, such as competitors from Uruguay, Paraguay or Brazil. Especially if the measures are expanded, as worried. “After this catastrophic mistake, it will be very difficult to regain the market and it will mean that it will be sold at a lower price.”
The beef exported from Argentina is also different from the beef sold locally because it comes from large animals that are fattened with grains, so the production cost is higher. The manufacturer said the product will have to be sold at a significant discount in the local market.
There are concerns that the then President Cristina Fernández de Kirchner implemented a similar interventionist policy that triggered a repeat of the 2008 agricultural strike. Argentina’s powerful vice president. Exports have fallen by as much as half and the national cattle stock has been reduced by 20%. Many meat packers also went bankrupt, and 12,000 industrial workers were unemployed. Although some industries have reopened since then, they are still heavily in debt.
“The problem is that you will lower prices in the short term-this is going to happen-but you have paid a huge price in terms of production, employment and exports. Prices will rise in the future.” Local economist Marcos Buscarria (Marcos Buscaglia) explained that when the stock of livestock in Argentina increases or is replenished, prices will rise again.
Kezia McKeague, director of the consulting firm McLarty Association, said the measure will further damage Argentina’s international reputation and its export-oriented agricultural sector. Capital controls, import restrictions and price freezes have made business in certain industries increasingly unsustainable, forcing some companies to leave the country.
She said: “Although the impact of high inflation rates is devastating for ordinary citizens, the decision to sacrifice Argentina’s typical exports is more a short-term political goal for the mid-term election year than any economic logic.” She added He said that despite the “unexpected unpredictability” of Argentina’s economic policy, the two-party government is still pushing for increased demand for the country’s export capacity, which is still very low relative to GDP.
After a sharp rebound since the end of Fernández de Kirchner’s term in 2015, agricultural products accounted for about half of total exports, of which beef accounted for about 5%. However, the consumption of beef in Argentina is particularly high, and the special position of steak in the local culture is gradually decreasing. After reaching a peak of nearly 60 kg in 2009, it fell to the annual average level of less than 50 kg per capita.
Many farmers are already angry at the Fernandez government, which has greatly compressed their profit margins by raising export taxes and forcing them to convert their income into foreign currencies at a substantial discount.
This dissatisfaction raised concerns about the renewed outbreak of conflicts with farmers in 2008, which led to Fernández’s resignation as cabinet minister at the time. The beef exporter said: “The government is repeating the same big mistake they made 13 years ago, and the consequences will be the same bad or worse.”
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