Argentian corn field last harvest season. Photo by Augustin Marcarian

This article out Buenos Aires explains the recent move by the Argentinian government to have farmers switch from primarily corn exports to soybeans. This shift in crop export is unexpected and unusually late as the planting season in Argentina is already underway and this switch puts Argentinian farmers behind in the planting process. This decision stems from the fact that the Argentinian economy has been stagnating causing turmoil in larger cities such as Buenos Aires. The President of Argentina, Mauricio Macri, has been under fire for the economic struggles of Argentina and this year is an election year in which he is struggling in the polls. This is ultimately what has caused for this action. Macri, is looking for a way to jump start the Argentinian economy temporarily to score cheap political points to maintain his job.

The question then becomes will this sudden change be effective. From a cost standpoint, soy is much cheaper to grow than corn as seeds cost less, it requires fewer resources and is easier to manage. From this base knowledge it seems that Argentina will able to make up some ground by having higher profits. However, this is not the case as soy yields a dramatically lower price per capita due to the ongoing trade-war between the United States and China. The hope of Macri is that Argentinian soy will be unaffected by the trade war and will result in some economic gains. However, economists believe that this policy change may be the final nail in the coffin for Macri as the trade war is only expected to continue thus skewing the price of soy.

Apart from potentially costing Macri his presidency the Argentinian switch may cause food challenges abroad as Argentina is the worlds third largest exporter of corn in the world. This sudden lack of corn will cause the price of corn around the world to rise and given that corn is a highly valued grain around the world this will have a ripple effect around the world. The effect will start in other corn producing nations as they are able to increase their revenue due to higher prices while corn importers will struggle to buy corn due to the price increase. This does not account for the trade war with between the US and China as the Chinese economy is difficult to predict.
In the United States this will hurt American farmers the most as soybeans are an essential crop to many farming co-ops and the influx of Argentinian soy will only add salt to the wound as the price of soy will continue to plummet from its already low point.

This is a timely article as we just finished discussing the Mexican revolution which was based on agrarian land reform. This is precisely what is transpiring in Argentina, the government is facing pressure from the working class and from that pressure a quick fix is being prescribed. The question becomes will this fix the issues or just proliferate the problem leading to radical reform.

Source Link:https://www.nbcnews.com/news/latino/farmers-argentina-ditch-corn-turn-soy-policy-outlook-darkens-n1049646