The best job in Argentina right now is farming.
Thanks to friendly government policies, booming harvests and a surge of cheap credit, the nation’s crop growers are thriving. That’s making agriculture an outlier as labor unions besiege President Mauricio Macri with wage demands and strikes, inflation proves tough to tame and car manufacturers lay off workers.
As Argentina’s broader economy continues to sputter, farmers are rebounding after years of feuding with the previous administration of Cristina Fernandez de Kirchner. Macri lifted or slashed crop and beef export taxes when he took office in December 2015 and also cut red tape for shipments, propelling agricultural investment. That investment is now starting to reach full throttle, spurred by loans that aren’t as cheap for other industries.
State-run Banco de la Nacion Argentina unveiled a line of peso loans to farmers last week with an annual interest rate of 10.5 percent to 11.5 percent. That compares with 17 percent for the loans advertised to small-and-medium-sized businesses in other sectors on the Argentine websites of Banco Santader Rio SA, BBVA Banco Frances SA and HSBC Bank Argentina SA.
“We believe in Macri,” said Jorge Scoppa, the president of the Argentine Federation of Agricultural Machinery Contractors based in Casilda, Santa Fe province. “The loans give us margin to buy equipment. Farmers are motivated.”
In Argentina -- beset by double-digit inflation and still living in the shadow of a crippling default about 15 years ago -- most people don’t take loans. The country’s ratio of private-sector credit to gross domestic product is 14.7 percent, according to the World Bank. That’s miserly compared with regional neighbors: in Chile, across the Andes, the ratio is 111 percent. In Brazil and Paraguay, it’s about 68 percent and 58 percent respectively.
Farmers feeling confident under Macri are bucking the national trend as the market booms for agriculture loans subsidized by the government and machinery companies. The hunger for cheap credit was on display this month at Expoagro, the nation’s biggest farming fair.
More than 145,000 farmers, machinery manufacturers, grain-company representatives, crop-association members and government officials descended on the fair in Buenos Aires province for everything from cattle auctions to networking over cocktails. Underpinning sales to farmers was a slew of new loan offers. About 20 billion pesos ($1.29 billion) of loans were sold for machinery purchases, according to the fair organizers.
In contrast, just days later, Argentina’s biggest labor unions were said to be planning a general strike for April 6 that could paralyze cities nationwide, La Nacion newspaper reported.
Back at the fair, more than 1,400 farmers buoyed under Macri asked Banco de la Provincia de Buenos Aires for loans worth 3 billion pesos, while Banco Macro SA said it lent 1.15 billion pesos.
Demand was so strong that salesmen couldn’t roll out the paperwork fast enough, Felipe Hughes, a director at Banco Provincia said in a telephone interview. “Barely an hour had passed and we already had lots of people signing,” he said.
“Last year when we came here there was only hope,” Agroindustry Minister Ricardo Buryaile told reporters at Expoagro. “But today, we are harvesting the reality.”
Scoppa of the machinery contractors federation is also looking to get in on the loan action. Farmers hire Scoppa and his contracting peers for planting, fertilizing and harvesting, a common practice in Argentina. As Scoppa looks to next season’s wheat sowing after helping the nation harvest a huge crop in recent months, he’s considering spending as much as 1.5 million pesos on a new Super Walter seeder and 1.1 million on a tractor, with financing from a subsidized loan.
Plans like Scoppa’s prompted Banco Provincia to loan almost 6 billion pesos to farmers in January and February. That was up 170 percent from the same period last year.
Farming “is in full growth,” Banco Macro said in an email this week. “And the aim of the bank is to swim with the current.”