THE BIG READ: Argentina's farmers brace for post-election turmoil

24 Oct 2019 | Ana Ionova

As Argentina heads into its first round of elections this weekend, uncertainty looms over what the result will mean for agriculture policy in the South American grains powerhouse and how the next government will approach the regulation of wheat, corn and soybeans.

Following a sweeping victory in a preliminary vote this summer, left-of-centre challenger Alberto Fernández is widely expected to emerge as Argentina’s next president.

That has stoked fears of a return to the restrictive export policies and interventionist economics that marked the reign of Fernández’s running mate, former president Cristina Fernández de Kirchner.

Market-friendly president Mauricio Macri, who was elected in 2015 with a wave of support from the agricultural sector, suffered a crushing defeat in the preliminary election, but has launched a last-ditch effort in recent weeks to rally his support base and secure another term.

Fernández has worked hard to distance himself from the agricultural policies of Kirchner, who feuded bitterly with the sector during her eight years in power.

One of the biggest crises of Kirchner’s presidency came in 2008, when an increase in the export tax on soybean shipments triggered a farmer strike that blocked roads and paralyzed trade for weeks.

The presidential frontrunner’s plans for the sector have been vague but he has promised policies that promote growth and development in agriculture, while keeping export policy open.

He has reassured industry participants that there will be no "distorting" policies or bans on agricultural exports.

Fernández has also stated he doesn’t agree with the “unfortunate” export levies currently in place on corn, wheat and soybean shipments, although he signalled he doesn’t see it as economically feasible to scrap the taxes immediately.

But mixed signals from his Peronist coalition (Frente de Todos) have cast doubt on his commitment to less interventionist policy.

One of the bloc’s key members recently put forward a list of recommendations that included boosting wheat and corn production, but also called for a strategic review of export levies on some products and regulation of foreign exchange from grain exports.

Felipe Solá, a prominent member of the coalition’s ‎Partido Justicialista party, has also spoken out in support of reviving the defunct National Grains Board, decoupling domestic grains prices from the international market, and raising levies on soybean shipments.

Macri, who reinstated export levies on grain shipments in 2018 amid fiscal pressure, despite sharply criticizing this policy earlier in his presidency, has made a more clear promise to scrap them by January 2021.

On international trade, Macri has also said he is committed to continuing his efforts to open up Argentina to global markets.

One of his key trade achievements has been a long-sought preliminary agreement between the European Union and Mercosur, the South American trading bloc to which Argentina belongs.

The grains giant also recently won approval from China to export soymeal to the world’s biggest consumer of the animal feed, after decades of sluggish talks.

This is poised to open a crucial market for Argentina and is expected to boost soymeal exports starting next year.

The country’s biodiesel sector also saw a boost during Macri’s reign, after Argentina struck a deal with the EU to remove tariffs on some exports.

Argentine biodiesel is mainly derived from soyoil and about half of production is exported globally.

The incumbent candidate has said progress is being made on trade agreements with Canada, Singapore, South Korea and others and has also signalled he sees further opportunities for grains exports to Indonesia and Malaysia.

Fernández has said he intends to continue bolstering Argentine grain and oilseed exports, which he sees as crucial to managing the country’s foreign currency debt.

However, he has been critical of the still-unratified trade agreement between the EU and Mercosur, stating it still “does not exist” and should be revised. 

Meanwhile, the current political uncertainty has meant that more Argentina farmers are considering shifting acreage toward soybeans - a less costly crop - as they worry about a possible return of policies that put limits or levies on corn and wheat exports.