The good times have dried up

BUENOS AIRES, Argentina — The good times never seem to last long in Argentina.

In 1983, democracy was restored after seven years of bloody military rule, but hyperinflation arrived soon thereafter, sending the country into financial chaos. In the 1990s privatization provided top-notch technology for the first time, and a peso/dollar peg gave Argentines spending power abroad. That bubble burst in 2001, though, when Argentina declared a $100 billion dollar debt default — the largest in modern history. Argentina has staged a remarkable comeback since, enjoying five straight years of 8 percent growth, fueled primarily by record-high prices for Argentine commodities such as soy, wheat, corn and beef.

Alas, Argentina’s salad days are ending once again. The global economic crisis has reduced demand for its farm goods, and now, to make matters worse, the country is suffering its worst drought in half a century.

The small farming town of San Miguel del Monte, 65 miles southwest of Buenos Aires, looks like countless others throughout Argentina’s vast agricultural plains. Cow carcasses litter the prairie. Stream beds have splintered into silt-colored cakes. Once-fertile soil has been reduced to dust under the blazing South American summer sun. There hasn’t been this little rain here since 1971.

The drought is having a devastating financial effect on farmers. Argentina is one of the planet’s breadbaskets: It’s the world’s second largest corn exporter and third largest soy exporter. The country’s grass-fed beef is prized around the world for its tenderness and flavor. But when there’s no rain, there’s no grass — and no nourishment. That’s when cows and crops die.

"If it doesn’t rain [soon]….. I will have to wipe out my entire corn crop, 220 acres," said farmer Cesar Gioia, who predicts his 2009 production will drop as much as 60 percent because of the drought. "The best I can do with the corn now is feed it to my cows," he said.

Industry estimates project Argentina’s farming sector could lose up to $5 billion this year, a figure that prompted the government to intervene last month. Facing mounting pressure from farmers, President Cristina Fernandez de Kirchner announced an emergency decree that exempts farmers who have suffered a 50 percent loss in their harvest or herds from paying most taxes for one year. The government has also reduced slaughter weight requirements for cows.

"This is a big boost of patriotism, and a sign of support from all Argentines," Kirchner said on Jan. 26. "All other sectors of the economy will continue to contribute, so we can help the farmers who have been affected by this drought."

Like her husband and presidential predecessor, Nestor, Cristina Kirchner has had a contentious relationship with farmers.

Both Kirchner administrations have relied heavily on farm tariffs to support public spending. Last March, just three months into her nascent presidency, Cristina Kirchner announced new agricultural export taxes that she said would be used to benefit the country’s poor. In response, farmers staged noisy, sometimes violent strikes and withheld grain and dairy shipments, affecting supply and prices at home and overseas. After a four-month stand-off, the proposal was overturned in July when Vice President Julio Cobos cast the deciding vote in the Senate against the measure, instantly transforming him into a hero for farmers — and persona non grata to his boss. Cobos and Cristina Kirchner haven’t spoken for months.

Even with the recent emergency decree, farmers still contend that the government is out of touch with their needs, and that taxes unfairly cut into their profits.

"Sure, this plan is approved now, and it helps, but we need money to feed cows, to go back to planting crops, because this drought is impacting life in every sector of society," said Eduardo Buzzi of the Argentine Agrarian Federation.

Buzzi and other farm union leaders are debating whether to begin roadblocks once again to protest the export taxes.

Scattered rain showers this week did provide relief to the dry land throughout the country, but did little to alleviate the drought — or the political tension. Provincial leaders have moved to take additional safety measures for their constituents: Governor Daniel Scioli declared a "necessary and urgent" agricultural emergency in populous Buenos Aires Province until July 31, which allows farmers to delay loan and tax payments.

Meanwhile, the governors of Santa Fe and Cordoba provinces called on the Kirchner administration to suspend crop export taxes for up to 180 days. Continuing his role as political maverick, Cobos voiced similar claims this week.

"The suspension of taxes … will help maintain the sector’s competitiveness and profitability," he said.

Even with state support, Lorena del Rio of the Argentine Rural Society says the prospects for the farmers in her area are bleak. Standing in a field of scorched soy plants in San Miguel del Monte, she points out that at this time of year the plants should be 4-feet tall, and near ready for harvest. Right now, they are wilting and barely reach her knees.

"This is just the tip of the iceberg. We are in the middle of summer, and the pasture is bare! Imagine in winter with ice and cold, it will much worse than now, it will be a disaster," del Rio said.

Juan Cahen D’Anvers sees a disaster as well, but for different reasons. Since the late 18th century his family has been farming in and around San Miguel del Monte, where he owns 1,730 acres of sunflower and barley fields. Ultimately, he says, it is Argentina’s political system, and not the drought, that is to blame for the constant state of conflict on its farms.

"Until we have a clear set of rules that allows us to produce our beef, milk and grains, our output will suffer, and others will too," he said. "Because agriculturally speaking, Argentina affects the world."

And until rain and resolution come to Argentina’s farms, the good times will be hard to find.