Striking farmers

  Argentina farmers took the street a couple of days ago protesting the export tax levied on their agricultural product. The whole country is running short on meat within 24 hours as of this moment. I was pretty surprised that even the most fundamental sector in an economy could get so political these days. Of course such instances were not unprecedented: for example in america there used to be something called populist reform, which as I understood had something to do with southern plantation farmers’ rights. But those were mainly driven by rich landlords and people in charge of large tract of grazing field. Argentina farmers are conceivably only slightly better off than peasants? So their action is more comparable perhaps to the russian proletariat revolution. In any case, may food go to the ones that need them the most and help create more productivity to keep our belove earth running.
  One last thing. The Argentina president Christina Fernandez said that the reason for raising the export custom is due to the fact that most of the agricultural product was exported in euros and dollars, instead of argentina pesos, which hurt the country’s economy. Why is that so? And by exporting in those currencies does she mean that’s the currency they take in? How would it be even possible to export in exchange of pesos, considering that pesos are not even one of the international currencies? Anyone with an economics background is highly appreciated here.

About aquazorcarson

math PhD at Stanford, studying probability
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2 Responses to Striking farmers

  1. arena says:

    1. The reason why exporting in euros and dollars is truly that euro and dollar are the most popular international currecies. According to the convention, international food market is priced in these currencies. So the exporting countries receive these currencies instead of those of their own.
    2. Argentina is in an unfavourable position when exporting in euros and dollars, which is mainly due to the exchange rate between these currencies and pesos. If euro or dollar is depreciating, Argentina will take great losses. If you have time, you can check the recent exchange rate. I believe it will helps. But if the facts goes the other way, it means my points are in correct.
    ps: Your questions are quite complicated. Above two points are only a small part of the reasons. In my view, it may be relevant to the economic scale of Argentian herself and the investment problem of the exporting revenue and etc. Recently, I am writing a thesis about oil problems which is rather popular for years. Through reading papers, I have got new ideas about economic world. But please point out if you have the different ideas with mine. I will appreciate it so much.

  2. AquazorCarson says:

    Thanks for your thorough explanation. I just wasn’t sure how else these products could be exported. The unruly governmental imposition of export tax lies at the heart of most social stabilities, it seems, and that’s why republicans are so fond of reducing tax in exchange of public endorsement, and leaving the democrats to wipe up their warheaded asses.

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