Argentine farmers are under pressure to sell their soy stocks, with the government rolling out carrot and stick incentives and punishments for stock hoarding in the world’s top exporter of soy oil and meal and the No. 3 for raw beans.
The government unveiled a preferential exchange rate for soy exporters on Sunday of 200 pesos per dollar versus the official rate of around 140 pesos. On Thursday it said farmers hoarding soy would face higher financing costs, a bid to push sales harder.
“They are trying to seduce farmers to sell and then we see the other side of the coin with these pressure tactics,” Jorge Chemes, president of major farming body the Argentine Rural Confederations (CRA), told Reuters on Friday.
Sales have spiked this week to some 3.6 million tonnes since the new exchange rate, dubbed the “soy dollar”, came into effect on Monday. That has helped the central bank build up reserves, though the government still wants more.
The South American country, also a major producer of corn and wheat, is the largest global debtor to the International Monetary Fund (IMF) and needs to rebuild its foreign currency reserves to meet future debt obligations with its creditors.
Argentina’s soybean industry as a whole brought in $21.5 billion in export earnings for the country last year and is the country’s main cash crop. It is seen as key to rebuilding depleted foreign currency reserves.
However, with inflation running at over 70% and economic malaise raising fears of a currency devaluation, local farmers had been holding onto more grain than last year as a proxy for coveted dollars in which exports are priced.
Nicolás Pino, the head of Sociedad Rural Argentina (SRA), another important farming body, criticized the new threat of higher financing costs for farmers who hold soy stocks of more than 5% of their production.
“The rules must not be altered and must be fair, because in this way the operation of the supply chain is being complicated and altered,” he said.
Chemes echoed the sentiment.
“Right where the producer needs attention, with special financing, he is being punished,” he said, adding that the move would hurt farmers who need financing to build up their operations. “What is it they want from the farm sector?”
The agriculture secretariat declined to comment.