Following Months Of Dispute Kirchner Easing Its Grip On Agriculture Markets


August 7, 2009

Officials from the administration of Argentine president Cristina Fernandez de Kirchner have announced a set of measures toward the liberalization of meat and grains exports -following demands made by farming organizations- in a move to resolve the ongoing conflict with farming leaders.

During a televised conference at Government House, Production Minister Deborah Giorgi informed that the volume of meat cuts that the government forces producers to sell in the local market will be cut from 65 to 35 percent of total production, regardless of the quality of the products, increasing 100 percent the exportable volume.

The changes in export regulations will pave the way for producers to export the most expensive cuts, as local prices are significantly below the international terms of trade.
Giorgi meanwhile confirmed that President Cristina Fernández de Kirchner will sign an agreement with the main cereal exporters in which the companies would commit themselves to supplying the domestic demand in return for free access to international grain markets.

The measures to free grain and meat exports came as a result of extended negotiations between farming leaders and officials of the Kirchner administration. The government announced last week it would free the registers to exporters of corn and wheat, which needed the authorization of the ONCCA trade watchdog.

Cereal companies had repeatedly complained about delays in the operations and denounced that the ONCCA was used as a tool to press farming lobbies. The measure aims at providing dynamism to grain exports, speed up operations and improve the stability of the market, Giorgi said at the press conference.

The Kirchner couple administrations export taxes on grains, oilseeds, beef and dairy produce have seriously hindered Argentina’s agricultural production. Once considered the bread basket of the world, Argentina could be forced to import wheat, milk and beef in the near future because of erred farm policies which discourage these activities.

The wrong policies, the dispute with the Kirchners and one of the worst droughts in the last half century have cut the overall grains and oilseed crops of Argentina almost 40%.
The export taxes, originally windfall taxes when soaring prices of commodities, which represent a significant percentage of Treasury revenue are also crucial for the Argentine government’s complicated system of crossed subsidies.

However since the Kirchners in July 2008 lost in the Senate a “positive No” vote on the tax issue, and in June 2009 were defeated at mid term elections, they have lost control of both houses of Congress and have been forced to change of strategy and virtually negotiate all issues.

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