MercoPress. South Atlantic News Agency

Farmers' conflict is costing Argentina 3.4 billion US dollars

The farmers' conflict is costing Argentina 3.4 billion US dollars, approximately 1% of GDP, but production and growth conditions in the country remain intact and are ready to resume in an excellent environment for food producing countries, according to economist Miguel Bein, a former Argentine Deputy Economy minister.

"When you cut the routes of an economy, production feels the blow. So far the conflict is costing 3.4 billion US dollars, one percentage point of Argentina's 340 billion US dollars GDP". Mr. Bein who now has an economics and finance consulting firm said that Argentina's economy in 2008 would grow 7.5% with an inflation of 22% and the US dollar costing 3.20 Argentine pesos by next December. However he also cautioned that the farmers' dispute "will remain unsolved". Regarding growth in 2009, Mr. Bein was optimistic and contrary to forecasts of 2 and 3%, he said that "they don't now what they are talking about". "Obviously is not impossible to turn any situation into a disaster but the Argentine economy is very strong because of the international situation: next year we'll grow between 5 and 6%". Nevertheless Argentina will abandon "Chinese" growth rates (almost two digits), "but this is because we are close to full employment". In spite of the current difficulties because of the farmers' stoppage with hundreds of towns and villages virtually paralyzed and the collapse of consumers' confidence and economic agents' expectations, "sooner or later the stored soybeans will reach the market". Bein admitted the Argentine Central Bank had lost reserves in the range of 6 billion US dollars, but this is not a disaster. Of the 6 billion, three are the unsold soybeans and other crops retained in farms and the other 3 billion are some economic agents fearful of the situation. "For each ton of soy retained from the market there's the equivalent in US dollars which is purchased by consumers". Economist Bein also pointed out to the great differences between the current situation and what Argentina underwent in 2001 and beginning of 2002. Besides Argentina is a great producer of food. "Currently corn is selling at 300 US dollars the ton; wheat 320 dollars; soy 570 dollars and sunflower 700 dollars the ton. It reminds me of the old westerns when a gold mine was found and cowboys began killing each other to see who would keep it. I repeat Argentina is a great producer of food. In April and May, with the ongoing conflict Argentina had a trade surplus of 800 million US dollars each month", he added. Argentina has a structural surplus of US dollars and record prices for its production and crops, "it's a conflict which happens when the Central Bank is full of dollars and with the best crop prices in history" he concluded.