Saturday, March 29, 2008

An e-mail fom my Dad.

Hey guys,

This is a note of response to Austin’s concerned email which is copied below. I am sending this to you three and a small circle of family and friends who I think might enjoy hearing something from us in Argentina.

Yes Austin, the news question you noted a couple of weeks ago was a story about the start of the highway blockades by Argentine farm groups. It has been interesting to follow the issue. Today’s paper notes that the blockades will lift in preparation for talks between farm groups and the government starting Monday. There was one large demonstration in BA which contained a couple of fist fights but for the most part Buenos Aires demonstrations have been peaceful.

On Tuesday night, after a televised speech by the Argentine President, Christina Kirchner, we witnessed a uniquely Argentinean phenomena. People were out on their apartment balconies and front steps with a ladle and sauce pan in hand banging in protest or dissatisfaction of the current situation. We were in an upper class neighborhood of BA but you could tell from the volume that literally thousands of people were joined in the protest. Whole neighborhoods were outside talking to one another. The last time Argentineans protested like this it led to an overthrow of the governing leader. A was a rather moving display of civil disobedience and peaceful civil protest.

The AR President tried this week to deflect the political pressure back onto the farmers by saying that her government would not negotiate with “a gun held to their head”. She took the risk of channeling city dwellers dissatisfied feelings about rising food prices into political pressure on the four major farm groups. Some commodities like milk and eggs have doubled in price since early March. There have been some reported meat shortages in grocery stores but I have not been able to see evidence of that. It also seems nearly all restaurants have adequate meat supplies. The city population seems to be evenly split as supporters or non-supporters of the farm communities issues.

I will be meeting with one of the largest farmer/ranchers in Argentina next week. He has a wing of his family which emigrated to ND when his father emigrated to Argentina. It will be interesting to hear the view from the farm side. My impression is that they have a pretty good life here in AR. This is probably due to some very productive soils and access first world agricultural technology. At the heart of this unrest is a surprise announcement that Argentina was imposing an Federal export tax on the export of soybeans. The announced beneficiary being Argentine social welfare programs. They are collecting about 45% of a bushel’s value at current prices and, on a graduated scale, the tax rises to 95% of a bushel’s value at soybean bean values of $600/mt and higher as was seen earlier this winter. The farm groups call this confiscatory and I think they are right.

I noticed that a couple of the international grain companies had to call into effect what is called a “Force Majer” clause in international grain contracts. It allows some delay in delivery and substituting of a grain shipments point of origin. With Argentina being such an important export country this probably had a large ripple effect on world markets last week. To invoke the force majer is an unsettling situation for already volatile worldwide grain market. World prices are at record levels and farmers who take the production risk to should have access to markets to capture their profits. No mater what flag they farm under. Markets can and do work well. As the old saying from Macro Economics 101 says “Nothing cures low prices or high prices like… low prices and high prices”.

As I said to you guys over the dinner table many times, food production and distribution is a very dangerous business in this world. Surpluses and shortages send people to the streets, topple governments, prompt people to war, and worst of all….kill innocents. Unfortunately, we in America are often shielded from this fact. We are spending way more on our dog food than most of the world has for human foods. We have this unique luxury in the First-World economies. The last 16 months of travel have changed our perceptions and solidified our convictions in many ways. We are so thankful that we are Americans but also more aware of the responsibility which that brings.

We have been completely safe during this period. We know better than to venture into a protesting crowd. We are, after all, guests here in Argentina. Know that if we ever felt our personal security was at risk we would take steps to move on. Don’t forget that your Mom & Dad have spent lots of time in Cuba. As economies on the edge go, Cuba is way more volatile than Argentina. It would take several days or weeks to empty the pipeline of foodstuffs here. Whereas in Cuba the margin between OK and a very bad food shortage (and the ensuing rioting) is hours or days. Their pipeline is less adequate and poorly stocked. You need not worry about us.

Enough rambling from here AND you boys need to get back to your college studies;) Hey Austin, by my calculations your email was sent at 4:30 am in England. Did I misread the time stamp or are you having trouble adjusting to the time change there at Oxford?

Love,
Dad
(Brad to my friends looking in on this email)

From: austin fay [mailto:a_fay21@yahoo.com] Sent: Saturday, March 29, 2008 6:23 AMTo: lisaSubject: be safe

farmers rioting in the street? be safe. have you seen anything? i suppose dad would be very interested in the motives behind it. probably right up his alley. i also didn't know argentina had a woman president...

be careful,

-austin

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Hemingway's House

Hemingway's House
In Havana, Cuba.