Soy vs Beef: Agriculture At Heart Of Argentina's Woes
ALCORTA — Walter Canzani’s farm is in one of the most fertile zones of Argentina’s Pampas region. Still a proud gaucho(cowboy), this son of Italian immigrants knows, however, that the cows that made Argentina’s beef the most famous in the world are no longer the big money-maker.
Although Canzani still keeps some 50 heifers in his pastures, these days he's focused more and more on an enormous field of soy, the crop which the late-president Nestor Kirchner used to lift the country out of crisis in 2001. Now Kirchner's widow and current president Cristina Fernandez de Kirchner has pushed measures to keep farmers cultivating soy as a response to the more recent economic slump and currency shock.
In 1978, when Walter was 10 years old, he inherited 48 hectares of land beside a rare asphalted road that cut through the plains of the Pampas, in central Argentina. “In the middle of the 1980s, people began to see the potential of soy,” he recalls, speaking under the shadow of the porch that surrounds his house. “But the real boom came in 2000.”
In 1992, one ton of this produce — used for food, animal feed, and fuel — was priced on the Chicago stock market at $180 dollars. By 2004, pushed by Asian demand, soy climbed to $407.
So, the farmers began to enclose their fields with electric fences so that the herds of Aberdeen Angus, which had previously been allowed to roam freely, couldn’t graze on this new farming gold. Canzani, who prefers cattle farming to tillage, gave in and did the same, still completely unaware that he already had an invisible partner in this new enterprise.
The Kirchner family came to power in 2003, with a center-left proposition that was quickly revealed as classic Peronism: state intervention on the economy, protective tariffs to strengthen industry and taxes on farmland. Nestor Kirchner imposed export taxes on soy that reached 35%. Given that Argentina had become the third biggest producer in the world after the United States and Brazil, this meant an important flux of capital was secured. With this money, the family financed big social plans for the lower class and incentives for industry, but while employment rose, the cost of living soared.
The farmers in the Pampas were forced to shoulder the new tax burden, a mechanism that had spurred national development from the 19th century onwards, creating a certain proud resignation that they must help fuel the recovery.
Beginning of the end
But by 2006, the inflation — increasing at rate of more than 20% annually — hit the food industry. When it came to the treasured beef output, Nestor Kirchner feared a revolt. He tried to keep the prices down, blocking exports almost completely, justifying the decision by saying Argentina needed to feed its own first.
For the country’s famous gaucho meat, this was the beginning of the decline. In 2005, Argentina was still the third biggest exporter in the world, but by 2012 it had fallen to the 10th place, outstripped by neighboring Uruguay and Paraguay. It’s worth noting here that international demand for Argentine beef never diminished, even if the export levels did.
“There isn’t any hope that the situation will get better any time soon,” says Walter, as he pumps water by hand from his well. “The smaller farmers are unhappy with the fields and they largely remain in the stables.”
After the state bankruptcy in 2001 and an agricultural protest in 2008, which was the most difficult moment since either Kirchner was elected, Argentina in 2014 is once again a country with a fundamentally unstable economy.
Years of official statistics that have been sugar-coated, from deficits in foreign trade to the budgets of state-owned businesses have killed any remaining optimism for GDP growth and tax revenue.
Both the government and the people have been so overwhelmed by the urgency to acquire solid assets that they still anchored everything that had become volatile. With international debt from the markets excluded after the default of a decade ago, Buenos Aires has returned, once again, to the Pampas, accusing the farmers of “exploitation” and ordering them to to open their businesses and increase exports.
“This would never have happened with meat,” says Canzani. "Because when a cow is ready, it has to be killed and butchered, while soy can wait in storage until the storm has passed.”
But Canzani's stainless-steel storage tank currently sits empty, because smaller farmers like him sell their crops as soon as they can. For all their risk and sweat, an Argentine gaucho still earns less than an average office worker.