Javier Milei, the libertarian, chainsaw-wielding firebrand economist who upended decades of political duopoly in Argentina, has been applauded into office by the nation's farmers who have long chafed under high export taxes.
The country's main rural associations said President-elect Milei was an opportunity for a "radical change" in policy for the grains sector, and offered to work "side by side".
Argentina is one of the world's top exporters of soy, corn, wheat and beef, but its farmers voted strongly for Mr Milei in Sunday's election, fed up with excessive government controls and taxes that have long choked the agricultural industry. Argentina currently taxes exports of soybeans and soybean products at 33% and corn and wheat at 12%.
Dollarisation, or replacing the peso with US dollars, could be a boon for soy trading — a stable currency would provide soy farmers with the certainty to commit to international contracts.
According to a Bloomberg report, unleashing the Argentine farm sector would "trigger a gush of exports to buyers in Asia and stronger competition for the US and Brazil, potentially transforming Argentine farmers into kingpins in a world where food demand keeps growing".
The farm sector welcomed the election of Mr Milei with the Argentine Rural Society saying, "A great opportunity has opened up to work together to make radical change to the current policies".
Another farm body called for tax reform, which Bloomberg calculates as one of the most punitive in the world for agriculture.
source: Bloomberg
Argentina continues to be one of the largest beef producers in the world, with China the dominant market. 77.6% of its beef shipments were sent to China in 2022.
The previous government briefly flirted with banning beef exports in August in an attempt to appease inflation-hit voters, but quickly backed down.
The cattle sector has had a complicated relationship with governments that have hobbled the industry. From 2003 under successive Kirchner governments, exports were discouraged to support low domestic prices. Argentina’s beef exports tumbled 69% over 12 years and the herd dropped from 60 to 52 million, as ranchers lost the incentive to expand.
According to Gro Intelligence, recent rains have eased drought conditions in Argentina’s soybean- and corn-growing regions, suggesting the country’s production looks likely to rebound from last year’s weak harvest.
Argentina is normally the world’s largest exporter of soybean meal and oil, so increased soybean production will bolster global supply chains for the commodities.
Conditions also have improved for Argentina’s new corn crop. However, for Argentina’s wheat crop, which is currently being harvested, the easing drought conditions came too late, Gro Intelligence said.