Argentina is suffering the worst drought in 20 years, with nearly all the country’s vast farmlands affected. La Nacion reports that 700,000 heads of cattle have died and up to USD$700 million could be lost by wheat and corn farmers this season. In some areas, like the northern parts of the Santa Fe and Córdoba provinces, rainfall is the lowest it’s been in 47 years.
The drought comes at a time when Argentina’s agricultural products are reaching high prices in an international market demanding ever-greater quantities of food products (although prices have slipped from the record levels reached earlier this year). It also comes on the heels of a 3-month strike by farmers, protesting export duties that they argued undercut their capacity to increase production and invest in technology.
The strike ended and the controversial increase in export duties has been dropped, but the situation between the farming sector and the government remains tense, with farmers continuing to demand an agricultural policy that encourages growth. The government argues that the export duties (now at 35%) are justified as a means of redistributing the massive gains farmers have made from the robust commodities market. By taxing exports, the government hopes to both keep domestic food prices down (about a third of Argentina’s population is poor, and many more would drop below the poverty line were food prices here to rise to international levels) and to raise revenues to pay off its considerable international debts.
A recent New York Times article compares Argentina’s policies unfavorably with those of Brazil, and the Economist argues that the Kirchner government’s agricultural policies have contributed to Argentina’s recent bad run with foreign investor ratings.