Argentina: It’s Time to Stop the Aggressions

Argentina: It’s Time to Stop the Aggressions
Three months later, the agricultural crisis continues without traces of a solution
By Maximiliano Borches, 3rd July 2008
Maximiliano Borches

Maximiliano Borches is a journalist and international analyst. He contributes to various media in the Latin American press and is director of the journal "Horizonte".
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Argentina appears to be losing a historic opportunity with regards to the global demand for food in a conflict between the government and the agricultural sector that has already lasted three months. But what is truly needed is a political model that will function for the next decade, says the author.
(From Buenos Aires) MORE THAN A HUNDRED DAYS AFTER the start of the conflict between the national government and agricultural businessmen, a resolution through dialogue seems increasingly distant.
“The strategy of the rural factions this past May 25th was to reunite the decimated opposition on a multifaceted platform” At this point, and in contrast with the simplistic argument that Argentina is losing a significant opportunity to sell its products in international markets at a time of global food crisis and a substantial increase in food prices, what is truly needed in Argentina is a socioeconomic model that will respond to its interests, and that suggests a political and economic confrontation between two antagonistic visions.
The strategy of the rural factions this past May 25th was to reunite the decimated opposition on a multifaceted platform. Present there were leaders of all sorts–from those of the Marxist left, like Vilma Ripoll, to the radical conservative Cecilia Pando (Who never passes on an opportunity to denounce the illegitimacy of the Juicios por la Verdad (Truth Trials), which have been carried out against the torturers and perpetrators of genocide by the Argentine military).Elisa Carrió, the leader of theCivic Coalition, and the president of the remnants of theRadical Civil Union,Gerardo Morales, were also present.
TAX EVASIONS AS AN EXCUSE FOR THE NEW LOCKOUT?
“The real reason for the inadequacy of the measure is that, in order to receive compensation, the producers must appear on tax roles and register their operations” This past March 31st, whenMartin Lousteau, the minister of the Economy, announced compensations for small grain producers for the differences of retentions and for transport, the logical assumption was that the conflict was moving toward a conclusion. However, the offer was rejected by the rural factions without much explanation as to why it was unsatisfactory, when apparently the offer would have put 80 percent of producers in better positions than before the mobile retentions.
The real reason for the inadequacy of the measure is that, in order to receive compensation, the producers must appear on tax roles and register their operations. Only a scarce minority can comply with this requirement. “The conflict between the government and agricultural businessmen brought to light several underlying arguments” The current controversy between wheat exporters and the agency responsible for authorizing the registration of sales abroad, theONCCA (National Bureau of Agricultural Trade Control), is directly related to this. The difference among them with respect to the amount of grain available for export is no less than four million tons - 25 percent of the estimated total harvest.
This would be the undeclared portion that, almost like extortion, would only be laundered if it was an authorized export. If going into the domestic market, it would remain in the black market until it was sold to the consumer as bread, flour, or noodles.
YES TO RETENTIONS, NO TO RETENTIONS
The conflict between the government and agricultural businessmen brought to light several underlying arguments that were necessary to define in order to set Argentina on a straight path for the next decade.
“The policy of retention sets a price for certain food products which, for now, remain affordable” Undoubtedly, the global food crisis and the massive production of bio-fuels being forced into world markets (fueled by the US and some European countries trying to cut their dependence on an ever more expensive and scarce petroleum) both require the same basic resource. The push for bio-fuel is keeping pressure on peripheral countries to cover their lands with soybeans, neglecting other products (until the point of risking a lack of adequate resources for feeding the livestock that provide meat and dairy products) that could feed the world.
In Argentina, a great portion of the diet is related to the raising of livestock and the consumption of meat.
“Even one of most highly respected neoliberals in the country sees the importance (as well as the limits) of the government’s policy of retention” Beyond this, the policy of retention sets a price for certain food products which, for now, remain affordable.
On a visit to Buenos Aires made at the end of May by the winner of the Nobel Prize in Economy 2006,Edmund Phelps, to present the Phelps Chair of Dynamic Law and Economy in the Department of Law at the University of Buenos Aires (UBA), Phelps stated that retentions only improve domestic prices in the short term, but do not solve the real problem.
In other words, even one of most highly respected neoliberals in the country sees the importance (as well as the limits) of the government’s policy of retention.
HOW TO OVERCOME THE CRISIS
Almost four months into this conflict, the time to stop aggressions has arrived, especially on the part of agricultural businessmen. It is time to sit down and maturely negotiate with society’s best interest in mind. “No government can give in to pressures without taking any economic or political poll, but neither can it close the channels of communication”
This conflict has exposed weaknesses on both sides: with regards to the government’s responsibility, the lack of a clear policy on growing inflation, the growing rates of poverty and indigence, and the energy problems that persist without solution; and on the side of the agricultural entrepreneurs, the constant denial of the whitewashing of taxes on their produce and exports, by which they shoulder costs that they should not have to in a country of 40 million people.
No government can give in to pressures (after six months of having assumed the power with 46 percent of the vote) without taking any economic or political poll, but neither can it close the channels of communication. Mobile retentions may possibly be reviewed, and a fixed rate may be set around 40 percent of the export price per ton.
Moreover, it is time to reach a settlement so that the government can be free to start creating real solutions to the real problems of the country.