MercoPress. South Atlantic News Agency

Uruguay divided over “invasion” of Argentine farmers

The Kirchners' administrations policy of heavily taxing Argentine farmers is having a very positive effect for neighboring Uruguay where a growing number of the most efficient farmers are now established, but some locals are not so convinced.

"Anywhere between 35 and 40% of Uruguay's crop land is being worked by Argentine investors and corporations", revealed Rodrigo Herrero, president of Uruguay's Rural Federation, the country's main farmers' organization. However "our people are now in the services sector or are relegated or simply can't compete with such a strong Argentine demand. These Argentine corporations have more resources and better access to cheaper fertilizers, seeds", added Herrero. One of the major advantage for the Argentine agro-business is their "risk diversification" since they have investments in different countries. "They have no economic impediments and can assume land rent costs which Uruguayan farmers can't. Their risk rate is also minimized given the dissemination of their risks". But former Uruguayan president Jorge Batlle is more enthusiastic about the "invasion". Uruguayan agriculture has expanded, "particularly favored has been the cereals and oil seeds sector; Argentine farmers come to Uruguay to benefit from international prices, avoiding taxes in Argentina". Farmers in Argentina must pay a so called "sliding" tax on grain and oil seed exports which begins between at 27% for wheat and reaches 44% for soy, which helped to trigger the current two months long conflict and that seems to have no way out in the near future. Argentina is one of the world's three main soy exporters shipping over 95% of the total crop. Another former Uruguayan president Julio Sanguinetti also described the Argentine farmers presence as "very positive for agriculture" since those who are coming over are "top line entrepreneurs". "Export taxes in Argentina has attracted them to Uruguay and they are helping to update all our crops system; I'd say they are welcome", said Sanguinetti who recalled that Uruguay applied a similar policy to that of the Kirchner administrations in Argentina, "forty, fifty years ago to help finance the industrialization of the country but with a different angle". Sanguinetti indicated that "wool prices at the time were depressed which helped as an indirect subsidy to the Uruguayan textile industry which developed vigorously. However in Argentina the resources end in government coffers".