News last update:6 Aug 2012

Export tax angers Argentinean farmers

With soy production taking over massive tracks of land, producing food crops for domestic consumption has become an increasing challenge for Argentina. With world food prices soaring, soy critics worry about Argentina's ability to feed its own people at affordable prices.

The debate over soy has riveted the country, and has proven to be a major crisis for the first woman elected president of Argentina, Cristina Kirchner. The president's decision to increase the export tax on soy has been in the eye of the storm.

The government implemented a tax on soy exports at a rate of 45%, up from 35% in early March. Farmers became angry and went on strike.

During the strike, millions of litres of milk were dumped and millions of chicks were drowned for lack of chicken feed.

The strike has had a significant impact on the prices on many goods like meat, chicken, vegetables, and dairy products.

Consumers may have to pay high prices on these products for months to come.

The strike may also have sparked inflation, which was already rapidly rising. The government's official inflation rate is 10%, but independent analysts put the rate at 20%.

The strike had almost entirely blocked food supplies from being delivered to Buenos Aires, the nation's capital. Farmers finally suspended the strike for 30 days in late March to facilitate negotiations with the government.

In response to the farmers' strike, president Kirchner has vowed not to back down on the tax hike.

The tax hike is hammering small farmers, who have had increased costs in fertilizers and fuel. In an unusual pact, the large land owners allied with small farmers during the farmers' strike. These two sectors have historically despised each other.

Soy destroys
In 2006, Argentina produced more than 47 million tons of soy. Top soil erosion and pollution caused from pesticides and fertilizers have been just some of the side effects to soybean plantations which have expanded exponentially at a rate of 10% annually.

More than 550,000 acres of forest land are cleared each year for soy production. The situation is so severe that the National Agro Tech Institute studies predict that in 10 years 70% of Argentine land will become desert.

Economists worry that mono-crop production like soy for plant-based fuels and feed will cause food prices to soar in Argentina, where food inflation continues to rise over 15% annually.

Alarm on food costs
In Argentina, there is rising alarm over the cost of food and the depleting supply of domestically produced food stuffs.

The production of Argentina's famous beef has plummeted in recent years. Many producers simply see soy farming as more profitable and lucrative, especially as speculations over global prices continue to increase due to the biofuels market.

Grain production for biofuels could make the world wide price of food skyrocket 76% by 2020.

More than 90% of Argentina's soy is exported. Argentines do not eat soy, and as the production of meat, milk and vegetables continues to decline, the likelihood of a major food crisis in Argentina grows.

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