Panic Sweeps Argentine Pampas as Farmers’ Old Nemesis Returns – Peronism
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All across the Pampas, in one wind-swept little farming town after another, a sense of dread has suddenly set in.
Mauricio Macri, the man who championed the cause of the Argentine farmer, is almost certain to lose his re-election bid in October and will hand back the presidency to the leftist party that tormented the region for years. A primary vote held a few weeks ago made that clear.
The concern is so severe that many here aren’t waiting for the actual election to confirm Macri’s defeat. They can’t, they say. The spring planting season is just weeks away and there’s only a small window left to overhaul plans before tractors are sent out into the fields. Soybeans, deemed a safer crop because they’re sold mostly in export markets, are in. Corn, which is more likely to be the target of government intervention because it’s consumed locally, is out.
Julio Reumann is one of those making the corn-to-soy shift.
“I have to prepare for the worst-case scenario,” he said one recent afternoon as the wind howled across his 2,000-hectare (5,000-acre) farm on the western edge of the Pampas.
Reumann has taken other steps to safeguard his finances. One is conventional enough. He’s trying to lock in prices now with buyers for wheat he put in the ground this past winter.
The other appears more unusual, almost desperate. He’s only applying a small dose of fertilizer to the wheat. Whatever grows will grow, he figures, but he’s not going to spend more money on a crop that Alberto Fernandez, Macri’s rival in the Oct. 27 vote, could force him to sell at deeply discounted prices.
“If Fernandez the populist governs, farmers will produce just to subsist,” said Juan Ouwerkerk, president of Alfa, a farmers’ cooperative in southern Buenos Aires province, Argentina’s bread basket. “It could be a train wreck.”
As investors dumped Argentine securities in an unprecedented rout after the Aug. 11 primary, and Macri sought to delay debt payments and curb capital flight, industries from e-commerce to shale oil scrambled to get a grip on the shifting political landscape. But it was agriculture, perhaps, where the jolt was felt hardest as memories of the previous government came rushing back to farmers who exported $22 billion of crops and beef last year alone.
Times were tough for growers and ranchers under Cristina Fernandez de Kirchner, Fernandez’s running mate who was president between 2007 and 2015, when Macri took over.
She curbed exports, capped domestic prices and demonized farmers, grouping them with what she depicted as a greedy clique of businessmen who imperiled her leftist reforms. Her first term was marred by huge protests over taxes on crop shipments.
Protectionism in those eight years meant dwindling cattle herds and paltry wheat harvests — a body blow for the Pampas, which occupy a special place in the Argentine psyche.
“The wounds are still raw,” Daniel Pelegrina, head of the Argentine Rural Society, said at a recent event in Buenos Aires.
The big question for farmers is whether Alberto Fernandez is able to forge his own path, moving Argentina to the left but keeping investors on board — in line with the measured tone of his campaign. Or whether Kirchner, as vice president, and her supporters pull the strings, which could signal a lurch back to brash economic interventionism.
“If they go down the Kirchner path, that’d put us on a collision course with the world,” Francisco Perkins, who farms about 14,000 hectares, said from Pehuajo, a town on the Pampas. “They could easily make exporters line up again at Moreno’s desk,” Perkins said, referring to Guillermo Moreno, a Kirchner-era official who oversaw prohibitive trade policies and price controls.
Two thirds of farmers think the next government will hike export taxes, and half are changing up investment plans in the wake of Fernandez’s triumph in the primary, according to a survey of more than 500 farmers by Zorraquin & Meneses, an agriculture consultancy firm in Pilar, Buenos Aires.
There couldn’t be a stronger contrast between the anxiety today in the farm industry and its contentment of recent years, with beef exports under Macri rocketing and harvests breaking records. The businessman-turned-politician is an ally not just because of his policies but because he’s held stakes in farm ventures.
Meanwhile, hostile attitudes toward free agriculture markets — rooted in how ownership of land panned out in the late 19th century and class divisions that emerged decades later — are prevalent in Fernandez’s party.
Take Felipe Sola, a lawmaker who’s being touted for a cabinet job with Fernandez. He told the TV station Todo Noticias he’d like the state to control the supply of wheat for milling to shield bread prices from rises in global grain markets and falls in Argentina’s currency. Inflation in Argentina is running at 54%.
Fernandez himself is ambiguous, offering support for his party’s interventionist past to help voters who can’t make ends meet under Macri, but also hinting at the need for exports to drive trade surpluses.
“It is difficult to know which of Fernandez’s faces we will see in government,” said Nicholas Watson, Latin America analyst for Teneo, a consulting firm headquartered in New York.
Fernandez told farm leaders at a meeting last week that he wants to bury the hatchet of the Kirchner years and maximize exports, though he also voiced concern about how global sales can drive up food prices at home, the leaders said. “Farming will be fundamental to flipping the ignition switch on the economy,” Fernandez wrote in a tweet after the meeting.
For Reumann, the farmer in the western Pampas, Argentina’s zigzag policies have influenced his decisions. Under Kirchner, he shifted to soybeans, an oilseed that needs minimal investment. Any corn and wheat he produced went into storage for as long as two years as the government created domestic supply gluts to depress prices.
Then came Macri, who, in search of export dollars to spur growth, pried off the shackles. As the market-oriented president offered a hand to farmers, including scrapping most export taxes, Reumann spent $275,000 on a CASE IH tractor, a cattle-feed mixer, and more machinery.
But after Macri’s plans for the economy failed, opening the door again to interventionism, Reumann — like thousands of his peers across the Pampas — is making the first steps to pull back investment.
“Unfortunately,” he said, “I have to change my mindset now.”
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