MercoPress. South Atlantic News Agency

Un-convened and unconvinced Uruguayan farmers again take to the roads

Tabare Vazquez out of agenda met with the un-convened protesting farmers. (Pic El Observador)

Un-convened and unconvinced Uruguayan farmers again took to the roads of the country for a peaceful protest vigil in an estimated 300 posts, and which counted with spontaneous support from small business people linked to the rural sector.

 The groups varied in size but local media expressed surprise at the number of people who joined the protesting farmers and shared with them the long night vigil and snacks.

Uruguayan farmers are protesting against direct and indirect taxes, the size of government, an unfavorable exchange rate for agriculture exports, widespread corruption and the ruling coalition's refusal to approve trade agreements with other blocks which are estimated to cost Uruguayan exports some US$ 240 million in tariffs, avoided by the country's major competitors.

The administration of president Tabare Vazquez first reaction was to believe it faced a summer blues, but was quickly surprised by the extent, depth and spontaneity of the protest, which also surprised the so called institutional farm lobbies. In effect the self proclaimed movement “Uruguay for all”, which only carries national flags and begins and ends rallies singing the national anthem, has no identified leaders, besides the whatsApp web, and rapidly extended to the nineteen counties of the country.

What has been determined is the possible trigger of the protest: in effect farmers had requested to meet President Vazquez on several occasions to talk about the plight of the different rural sectors, but to no avail. However in the last attempt Vazquez replied, “sometime in February because I am also entitled to summer holidays”. That set the bomb ticking and also surprising institutionalized farm organizations which have been rather cozy or acting with extreme patience with the government.

The un-convened held their first national meeting, a huge concentration which broke all estimates, and in the same orderly way they reached Durazno, they departed, after listening to several speeches, clearly specifying the plight of the different farming sectors based on official stats. The bloated government, national and municipal taxes, plus the unexpected increase in public utilities which in Uruguay are government monopoly and a very effective tool to collect funds for the treasury, particularly when it comes to fuel, power, water. A road system in much need of maintenance, which means extra costs and time. Claims that the large foreign investments such as the pulp industry and big feed lots with thousands of hectares, enjoy unprecedented fiscal benefits, that are not extensive to small and medium farmers. Extended corruption, cronyism, nepotism and a state which back in 2002 had a cost of 2 billion dollars with a national GDP of less than US$ 20bn, while under the current coalition has soared to US$ 17bn on a GDP of US$ 50bn, with the incorporation of some 60.000 new government employees.

Finally the government reacted, ministers and advisors stopped basking in the summer sun, and Vazquez said he was prepared to meet farmers, institutionalized farmer lobbies, at the end of January, and so did. But before the president turned up and received a representation of the un-convened who pretended to hand him a copy of their Durazno declaration. Apparently the meeting was brief, polite with the promise of a raft of measures for the different sectors. However Vazquez again committed a mistake, he insisted the official economic policy would stand, and pledged to organize a wide ranging committee with the different ministers, and farmers representatives. In South American politics it is well known that when there is an interest in “killing” an issue, organize a committee and the more members the better.

The fact is that the measures announced, mainly for dairy and rice farmers were considered overall unconvincing, insufficient, short term, and basically ignored how tough conditions had become for the rural sector, particularly small and family farms.

Thus the un-convened and unconvinced again took to the roads, and are programming another huge rally to assess the latest events. But even if the original impulse for big demonstrations can be expected to erode, the problem for the government and its unconvincing promises is that the multiplication of smaller but close to farms and farming towns, with locals support, is not expected to recede. Enthusiasm can be expected to reignite at the end of February, beginning March, when summer holidays are over and schools reopen.

The underlining issue is that after almost twelve years of uninterrupted economic growth, with strong tail winds from the commodities boom, the impact has neutralized and in the meantime the Uruguayan government needs between 2 and 2.2bn dollars annually to cover the 3.8% GDP budget deficit. The stream of dollars into Uruguay revalues the currency, increasing costs in Pesos and decreasing revenue from export dollars, while the government is forced to float IOUs to absorb the additional liquidity.

Carry-trade speculation plays a role turning the whole financial game into a vicious circle, and this will continue as long as the government is not prepared to contain its avidity instead of slimming. Something which politically is most challenging, since the group inside the ruling coalition which is prepared to apply orthodox economics is outnumbered by ex president “clumsy” Jose Mujica benches in parliament and the Communist party which controls the unions and streets of Montevideo and main towns.