BUENOS AIRES, Argentina – In Argentina, where economic chaos has given
birth to 11 different currencies issued by cash-hungry local
governments, farmers have found a bushel of soybeans is worth more than
a bag of banknotes.
In a bankrupt country where a massive debt default and a freeze on bank
deposits have made credit nonexistent or prohibitively expensive,
farmers in what is still an agricultural powerhouse have found a
currency strong enough to buy a car or even an apartment – grain.
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Newspaper and TV ads invite farmers to “make your harvest worthwhile”
by buying trucks, tractors and agrochemicals with their agricultural
output, now valued in safe-haven dollars on the international markets,
while the rest of the country has to make do with devalued pesos or
weak provincial currencies.
Farmers are responding to the invitation by the shipload.
All they have to do is transfer several tonnes of soybeans, wheat or
corn to the companies selling the product they want.
“You see a lot of new trucks around here. Now they cost a lot fewer
kilos of soy than they did before. It’s a good time for the export
sector,” said Daniel Martinelli, a medium-sized soybean producer in
Cordoba, a farming province.
For many living in the shadow of Argentina’s worst ever crisis,
bartering systems have become a preferable way of doing business.
A drastic January peso devaluation has made grain a hot commodity since
they are sold on global markets at prices quoted in dollars. After more
than a decade of parity with the dollar, the peso is now worth about 28
cents US.
Farmers in Argentina, where farm goods accounted for half of the $26.5
billion in exports in 2001, have seen their earnings in pesos surge,
making them attractive consumers for firms desperate for customers amid
a four-year recession.
Grain holds its value regardless of the stability of the peso or the
level of inflation.
“We’ve had a lot of people calling in,” said Javier Martinez, head of
marketing at Dinosaurio, a real estate company in Cordoba province that
accepts grain as payment.
“We’re doing this because we need to keep selling and because the only
real currency there is grains. The plan allows people to swap grains
for real estate like an apartment,” Martinez said.
Farmers have bartered in the past in small deals for basic supplies.
Now they can swap for a variety of goods.
“They are swapping for everything. I’ve bought trucks, machinery and
even an insurance policy against hail,” said Cordoba farmer Nestor
Roulet.
The local unit of U.S.-based agrochemical giant Monsanto Co. said swaps
accounted for more than half its sales this year.
“It’s been our solution in order to continue operating during such an
unstable year. Thanks to the swap system, we are selling our goods,”
said Federico Ovejero, head of public and government relations at
Monsanto Argentina.
In the last fiscal year, Monsanto took in enough grain through swaps to
fill 22 ships, each carrying 50,000 tonnes, for a total of about 1.1
million tonnes.
Depending on commodities prices in coming months, next year the number
of ships could reach 44, representing around 80 percent of Monsanto’s
local sales, the firm predicts.
U.S. automaker DaimlerChrysler said Argentina’s farmers could now buy
cars with grain to help the ailing auto industry.
Farmers, who have seen a spurt in earnings due to the devaluation, fear
putting profits in banks due to a freeze on deposits put in place to
protect the fragile banking system. The freeze was partially lifted on
Nov. 25.
“The farmers I know have almost no money in banks apart from what they
need to pay operating expenses. People are afraid of what could happen.
Commodities offer the only protection against financial uncertainty
right now,” a trader said.
Firms like Monsanto, Bayer AG, Cargill, Nidera, Ford Motors Co., Toyota
Motor Corp. and General Motors Corp., among others, accepted 3.5
million tonnes of grain for part of their sales, according to private
data.
Despite the large volume of grain being accepted by businesses not
dedicated to the grain trade, the goods are not handed over directly to
the company. Instead farmers negotiate the amount of grain they must
deliver and to which port.
“The payment can be made without the farmer having to transform the
grains into pesos and conduct the transaction through a bank,” said
Mario Gilbert, a commercial manager at Toyota.
The growth of the swap business has forced many companies to follow the
local grain market on a daily basis.
“We had to sort of transform ourselves into grain traders in order to
adapt. It’s hard to grasp using a good as a medium of exchange; there’s
no precedent for it. It’s not common to buy an automobile with another
good,” said Alberto Garcia Carmona, local head of General Motors.
Agricultural machinery firms like John Deere, Deutz AG and New Holland
receive grain for about half of the machinery they sell.
“It’s the only type of financing that exists on the market because the
state banks don’t offer credit lines and those that our own firms used
to offer no longer exist,” said Eugenio Valenciano, head of the
Association of Argentine Tractor Makers.
