Friday, May 16, 2008

Argentine Farmers and Collective Action

One of the less noticed and most interesting parts of the ongoing conflict between farmers and the government is the remarkable cohesion and capacity for collective action of the farmer. After all Marx once likened farmers to a "sack of potatoes" (or Kartoffelsack) because of their inability for collective action. And the Argentine farmers would not seem in a particularly favorable position: They are represented by four different organizations, spread out geographically, and have traditionally not been a very effective actor in Argentine politics. So what happened?
Certainly high world market prices for food have helped. More importantly, though, there seems to be a new generation of farmers, (such as the ones described in this NYT article) who are college educated, use modern technology for both farming and communication (both of which would help to overcome information problems in collective action), and, are apparently very politically savvy:
  • They stopped the first rounds of protests - which led to significant shortages in Buenos Aires - just in time before public opinion in the capital turned against them: According to a recent La Nación poll (to be taken with a thick grain of salt because of the papers' anti-Kirchner views) more than 70s of Porteños support the farmers. Now that they have resumed the protests they block exports, not transports to the city in order to not harm their support among the urban middle class.
  • Their alliance with the urban middle class is impressive - and quite unlikely - as the two groups have opposing interests in almost every economic sense. Yet middle class urbanites took to the streets with the pots and pans in cacerolazos in support of the farmers right after they resumed their protests.
  • As negotiations with the federal government seem stalled, the farmers increasingly address provincial governors, most of whom have ties to Kirchner, but are vulnerable to electoral pressure, especially in the agricultural provinces where large parts of the population sympathizes with the farmers.
  • Finally (and this is my favorite one) according to La Nación the farmers are learning from the best and have hired a French consultant to help organize and co-ordinate their protests. [is "collective action consultant" becoming a new potential field of work for political scientists?]
At the same time the Kirchner's, who have such an impressive record in outmaneuvering their political opponents domestically and internationally appear to be completely off their game. It seems to me that they are getting clobbered on the PR-side of the conflicts, with the farmers constantly emphasizing their willingness to negotiate, while the government appears almost stubborn. To make things worse, Kirchner has almost simultaneously started a bitter conflict with Clarín, the largest and most influential daily.

None of this is to say that in terms of actual policy the government is all wrong. The newest increase in export taxes was actually the result of a moving tax rate that depends on the world market price and is thus (if I understand correctly) in a sense progressive - which seems like a pretty sensible measure to me. In terms of agricultural export taxes I'm less certain. Domestically, I like their distributional effects, but I'm worried about some other effects: One, the obvious effect on world market prices - it increases them - which makes the situation even worse for people in food importing countries who are actually starving.
Secondly the mid-term effect that higher prices could have to increase supply, though I'm not sure how strong that effect would be in practice.
More remotely, it is also clear that Argentina will want to maintain its current trade and current account surplus (which will decrease as exports decrease), but as of now, I'm not very concerned about that: The current account surplus 2007 was as US$ 7bn or about 3% of GDP (for comparison, China is at about 8%).

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