Argentine farmers shun peso for a bag of beans

Damian Wroclavsky 

ARTICLE (November 29 2002) : In Argentina, where economic chaos has given birth to 11 different currencies issued by cash-hungry local governments, farmers have found a bushel of soyabeans is worth more than a bag of banknotes.

In a bankrupt country where a massive debt default and a freeze on bank deposits have made credit non-existent or prohibitively expensive, farmers in what is still an agricultural powerhouse have found a currency strong enough to buy a car or even an apartment: grains, and in huge amounts.

Newspaper and TV ads invite farmers to "make your harvest worthwhile" by buying trucks, tractors and agrochemical with their agricultural output, now valued in safe-haven dollars on the international markets, while the rest of the country has to make do with devalued pesos or weak provincial currencies.

Farmers are responding to the invitation, by the shipload. All they have to do is transfer several tonnes of soya, wheat or corn to the companies selling the product they want.

"You see a lot of new trucks around here. Now they cost a lot fewer kilos (pounds) of soya than they did before. It's a good time for the export sector," said Daniel Martinelli, a medium-sized soya producer in Cordoba, a main farming province.

For many living in the shadow of Argentina's worst ever crisis, archaic bartering systems have become a more preferable way of doing business than using the sophisticated but unstable financial tools of Argentina in the 21st century.

A drastic January peso devaluation has made grains a hot commodity since they are sold on global markets at prices quoted in dollars. After more than a decade of parity with the dollar, the peso is now worth about 28 US cents.

Farmers in Argentina, where farm goods accounted for half of the $26.5 billion in exports in 2001, have seen their earnings in pesos surge, making them attractive consumers for firms desperate for customers amid a four-year recession.

Grains hold their value regardless of the stability of the peso or the level of inflation.

"We've had a lot of people calling in," said Javier Martinez, head of marketing at Dinosaurio, a real estate company in Cordoba province that accepts grains as payment. "We're doing this because we need to keep selling and because the only real currency there is grains. The plan allows people to swap grains for real estate like an apartment," Martinez said.

Farmers have bartered in the past in small deals like for basic supplies. Now they can swap for a variety of goods.

"They are swapping for everything. I've bought trucks, machinery and even an insurance policy against hail," said Nestor Roulet, a farmer in Cordoba.

The local unit of US-based agrochemical giant Monsanto Co. said swaps accounted for more than half its sales this year.

"It's been our solution in order to continue operating during such an unstable year. Thanks to the swap system, we are selling our goods," said Federico Ovejero, head of public and government relations at Monsanto Argentina.

In the last fiscal year, Monsanto took in enough grain through swaps to fill 22 ships, each carrying 50,000 tonnes, for a staggering total of about 1.1 million tonnes.

Depending on commodities prices in coming months, next year the number of ships could reach 44, representing around 80 percent of Monsanto's local sales, the firm predicts.


Source: Business Recorder