The shock front-runner in Argentina’s presidential election, libertarian Javier Milei, would strip out state intervention from the country’s giant farming industry to unleash an export boom.
Free-market devotee Milei vowed to quickly dismantle policies that have held back agricultural investments this century. He would unify foreign exchange rates, scrap export taxes and quotas and remove direct meddling in food prices.
“It’s part of our deregulation programme,” Milei said in an interview at Bloomberg’s Buenos Aires offices on Wednesday. “Those are all regulations we have to get rid of as quickly as possible.”
Argentina is a top global supplier of beef as well as soybean meal and corn to feed livestock in other countries. But farmers haven’t been able to fully tap the potential of vast flatlands because of years of market intervention designed to bolster tax revenues and quell inflation. Milei says Argentina’s high poverty rates prove it’s been a failure.
Since he plans to take an ax to government spending and stamp out inflation by ditching Argentina’s currency, the interventions — as well as going against his libertarian values — would, in theory, become redundant. A subsequent free-market system can “achieve an explosion in farming activity,” according to Milei’s manifesto.
Still, the road to such radical change is likely to be rocky: Should there be street protests or dissent in congress, it may stop investors in their tracks.
Farm exports grew under ex-President Mauricio Macri’s brief experiment last decade with market-oriented policies. But Milei would take things a step further by eliminating billions of dollars of annual taxes on soy shipments.
In a transition period, farmers would pay the soy levies in return for a smaller income tax bill, Milei said. They would become so rich under Milei they’d even be willing to finance his government, he said, a notion that’s anathema to them under the current administration.
Oil and Lithium
In the oil sector, Milei said investors should have “no doubt” that he would re-privatise crude driller and refiner YPF SA, which was nationalised in 2012 to spearhead development of Patagonian shale riches. But the privatisation wouldn’t happen for about two years since a Milei government would need time to prepare the shift to freer energy markets.
“We need YPF and ENARSA to manage the transition while we put the energy sector in order,” Milei said.
Argentina’s burgeoning shale oil industry has been constrained by capital, price and export controls that Milei would move to banish. Restrictions on money flows recently drove Exxon Mobil Corp. to put its shale assets up for sale, according to the governor of oil heartland Neuquén.
On mining and metals, Milei did not stray from his ideals, saying he’d leave markets to their own devices.
The government has been working to avoid yet another Latin American resource curse by trying to turn Argentina’s lithium rush into a homegrown battery-manufacturing industry for electric vehicles. Asked whether he’d abandon those efforts, Milei said: “Don’t pick the winners. Let the batteries be made wherever people want to make them.”
Milei said he would not foster diplomatic ties with China because of what he called its encroachments on personal freedoms. But neither would he get in the way of Sino-Argentine trade and investment. China is a huge buyer of Argentina’s unprocessed soybeans and beef, and a leading developer of its Andean lithium deposits.
– TIMES/BLOOMBERG
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