Argentina Running out of Options

(from Soberlook.com)

The old saw, "the taxes on the farmer feeds us all" has never been truer than right here, right now in Argentina.

This is basically an agrarian nation with some impressive industrial capacity.  Make no mistake, however, agriculture pays the bills.

Although the opposite view persists, the chickens are coming home to roost.  During the past few years of extraordinary grain prices, Argentina has been able to heavily tax grain exports in order to fund general revenues.  Soy and corn exports are taxed at 35% of the sale price ...without regard to what expenses were required to produce those grains (beef exports, when allowed, are taxed at 15%.)

Now, the demand for soy and corn has declined ...and this is reflected in its price.  This presents some big problems for a nation that has grown accustomed to financing programs with the proceeds of agriculture.

That might not have been such a big issue had farmers and ranchers and dairy producers felt free to invest their profits into their operations and expand them.

As it is, no agricultural person is investing in expanding their business.  The current decline in grain prices is making this even worse.

If we were truly an industrial nation, we could weather this storm without much trouble.  However, the denial that our exports are mainly agricultural leads to problems that could take years to reverse.

As a socialist, I could never advocate exporting food from the plates of my fellow countrymen for private profit and national revenue ...but to kill the geese that laid the golden eggs here in this beautiful land for so long seems a ridiculous recipe.

Argentina needs the expansion of agriculture here more than ever.  The world needs the expansion of Argentine agriculture more than ever.

Left to our own devices, we ag-types will over-produce ourselves into the poor house.  If, however, buying a new pick-up or going on vacation makes more sense than buying a new tractor or artificially inseminating ...it won't be just us farmers/ranchers who will suffer in the long-term.