Often farmers give a big yawn when it comes to the complexities of South American farm business. However, they and their organizations had better do some solid thinking when it comes to Argentina’s tragic near-bankruptcy: foreign trading partners sweat over the US$130 billion they are owed in unpaid bills and other outstanding debt.

The immediate crisis is bad enough but what of the future? By the middle of this month the peso had been devalued to frightening levels: 2.2 to the U.S. dollar and street traders predict 5 by the end of this year. This for a currency that not so long ago was on par with the greenback. Tragically, the chickens came home to roost when politicians over the years pledged social and health programs to achieve re-election, ignoring that the national treasury had run out of money and credit-worthiness.

So far, our own politicians and many farm leaders have buried their heads in the sand. They pretend that Argentina’s woes are nothing but a dark cloud on the horizon that will blow away with a convenient exorcism. Sorry fellows, the bell, book and candle won’t work. Each time the peso is devalued, world soyabean prices dive in sympathy followed by imported feed components.

Further, a free fall likely will gather speed as Argentinean farmers, encouraged by their government, increase planted acreages in quantum leaps. The resulting export sales are needed desperately to keep the country from asphyxiation, almost regardless of the price. This is not doomsaying. Over the past year, soy exports doubled and could double again over the coming months.

Closer to home, recent U.S. soy exports fell to 46 from 57 per cent during the past marketing year, and could fall even more sharply during 2002. This translates into much lower protein prices for us, a crisis when costs already outstrip returns. Thoughtful dairy farmers should be wary of the consequences, especially across the border where milk prices collapsed prior to Christmas as imported butter nudged 27 million pounds during the earlier months, according to one study.

American farmers point accusing fingers at several countries, including the European Union, New Zealand and Canada. At the same time they have increased pressure on farm state senators and congressmen for improved subsidies and more protection. As could be expected, the White House pledged to support $73.5 billion earmarked for new farm spending. Why not? Mid-term elections are coming up and President Bush seeks to regain control of the Senate where Democrats have a paper-thin one-seat edge.

Meanwhile, Ottawa plays dumb. The piggy bank is empty, at least for farm programs. A top priority now is a $2 billion barrel of pork, the Strategic Infrastructure Foundation. It will finance "large projects across Canada," and is the latest of seven similar agencies funded with an astounding $8 billion siphoned from tax revenues.

Will our farm groups finally grasp that here lies their defense against a looming catastrophic price downturn?

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