Labor unions in Argentina organized a 24-hour strike on Wednesday, May 29 that resulted in grounded flights, halted public transportation, limited hospitals to emergency care and shut the country’s largest port, Rosario, from loading cargo including soybeans and soybean products. This is not the first coordinated labor stoppage, as unions had conducted previous coordinated stoppages in April and September. The unrest comes as the nation struggles economically under the current administration headed by Mauricio Macri and as elections loom in October later this year. Policies that are said to have resulted in hyper-inflation, which has led to lower purchasing power and shut down an estimated 14,000 small- and medium-size companies, are central issues that spurred the stoppages.
Since coming to power in 2015, Macri has relied on tax revenue from agricultural exports as a key funding mechanism for the country. Changes to the tax structures, whose levels vary between those of grain/seeds and processed products, have created changing dynamics in the domestic agricultural markets. As of early May, Argentina’s tax structure on soybean meal was equivalent to that imposed on soybeans at 15 percent. Previously, Argentina had levied a higher tax on raw soybeans than on soybean oil, soybean meal and soy-based biodiesel. The shift in tax structure, along with increased export demand for South American soybeans from China, has reportedly resulted in smaller feedstuffs for domestic processing which has in turn made U.S. soybean products more competitive on the world market.
According to the U.S. Department of Agriculture’s (USDA) 2017 Agricultural Outlook Forum, 66 million tonnes of the 83 million tonnes shipped out of Argentina in 2016 passed through Rosario. The study showed that 96 percent of protein meals and 97 percent of vegetable oils went through Rosario, while the portion of soybeans was smaller at just 35 percent. Regardless, the amount of agricultural products that leave the port is central to the health of Argentina, and further disruptions cannot be ruled out as upcoming elections near and as tensions rise in the country. This has the potential to delay shipments from Argentine ports and could shift more demand to the U.S.