Argentina is already an agricultural powerhouse—and the results of its recent presidential election promise to make it stronger still.
That’s because the victory of Javier Milei could mean the end of bad public policies that have held back farmers. If he can wipe out export taxes and turn his other ideas into law, he’ll unleash a key sector of our economy.
On our farm, we of course hope he succeeds brilliantly from his first day in office, which begins on Dec. 11.
We’re next to the Rio Salado, near the town of Alberti, about 200 km west of the capital of Buenos Aires. I was born and raised in Argentina—my ancestors came from Ireland in the 1840s and from Canada in the 1890s—and the farm has been in my wife’s family for nearly 150 years.
We’re currently planting soybeans, having just finished early-season corn. In a few weeks, we’ll start to harvest winter wheat.
Most of what we grow we’ll seek to sell to customers in other nations. Argentina produces enough food to feed a country with ten times its population.
Yet our government constantly interferes with our ability to trade. It adds an export tax of 33 percent on soybeans and 31 percent on other soy products. It also imposes a tax of 12 percent on the export of corn and wheat, making it difficult for most farmers to get a good return.
Simply put, we’re overtaxed.
But it gets worse, the government has decided that there should be export quotas, to keep food available for the population, so quotas and export taxes allow for a low price of grain. Currently there are multiple exchange rates, there is the official exchange rate at which grain sold through the Grain Board and the forward contracts signed are calculated, then if grain is sold outside of the Board with no forward contract the government allows the exporter to use an average of the official exchange rate, and the market exchange rate which is over double the official exchange rate, then there is another rate to purchase dollar bills and or dollar bonds.
Because of this, we earn less income than we should and global food prices are higher than they ought to be.
Politicians have justified these policies as strategies for fighting inflation, which is out of control. In October, it was more than 142 percent. This rate has gone up almost every month since the start of 2022, when it was already too high.
Yet our economic failures are not natural disasters. They are the results of poor choices, and farmers especially have paid the price for these blunders.
It’s no wonder that Milei won the runoff election on Nov. 19. He prevailed with more than 55 percent of the vote, against an establishment politician who promised more of the same.
I’m 64, and it was encouraging to see that he performed well among young voters, who want new ideas and a better future—and an end to the status quo, which has robbed them of the opportunities they deserve.
Most farmers also supported Milei, which is no surprise. He has called for the elimination of export taxes and quotas, a new seed law that would improve intellectual property rights, and agricultural insurance for all. Moreover, he has endorsed the sound agricultural practices that we have adopted on our farm, such as no-till farming and cover crops—techniques that protect the soil from erosion and build biodiversity.
If Milei and his team get the macroeconomics right, they will provide a huge boost to farmers. We’ll improve our ability to trade, see an increase and improvement in inputs such as fertilizer, and invest in irrigation and processing technologies.
In addition, more acreage will move into agricultural production (with no additional deforestation). Right now, fertile land in remote areas remains unused because the trucking cost of bringing food to ports is simply too high. In other words, Argentina is growing fewer crops than it should because the government’s bad policies have depressed their value and encouraged inefficiency.
These are bad mistakes at any time, but recently they’ve compounded an unavoidable problem: a three-year drought in which we’ve received only half of our annual average rainfall. Our farm’s 10-year average for full-season soybeans is close to 4.5 tons per hectare, but last year we got only 1.35 tons per hectare. We’ve seen similar declines in other crops.
We know the weather can get better—and now we can believe that agricultural policies will improve as well.
None of this will be easy. Milei has warned us that difficult decisions and hard times lie ahead. We expect the devaluation of our currency, but this is the only way forward.
Farmers are resilient. We’re ready to do our part, and it’s good to know that help is on the way.
Featured Image Credit: Instant Images, Gustavo Sánchez