apples and broccoli - only for the rich

Writer friend Amanda wrote the following piece recently for a Canadian newspaper interested in the rising price of global commodities. It definitely helped me understand why my grocery bill seems to double every month. It's not just because I'm a foreigner. They will translate it into French before publishing. Here's the English version...

Argentina's Efforts to Keep Food Prices Low Fall Short

Since recovering from a financial crisis that crippled
the country in 2001, high international commodity
prices have helped Argentina develop into one of the
world's fastest growing economies. Argentina is the
third largest exporter of soybeans, the sixth largest
exporter of wheat, and a leading producer of other
agricultural commodities. But not all news is good;
in spite of government policies to minimize price
increases at home, Argentines are paying the highest
prices for food in years.

"It's terrible", says Bernardo Velez, a building
maintenance worker. "We have to ration our food now."

Although still low by international standards, prices
for milk, rice, pasta and beef have almost doubled
over the last year in spite of extensive government
intervention. The government's food price controls,
farmer's subsidies, export bans, and taxes on
agricultural exports haven't had the desired effect.

"Argentina is a peculiar case", says Luciano Laspina,
of Macrovision, an independent economic advisory
group. "It's a large producer of food and has
agricultural independence, which allows the government
to minimize the impact of high international prices
locally. It uses export taxes, bans and other
interventions, but over the last year and a half,
these policies have become less effective, due to
inflation, increased demand, and higher costs of doing
business."

Accurate figures on Argentine inflation are hard to
come by. The government reports an inflation rate of
8.8% for 2007, a figure largely contradicted by local
analysts. Macrovision's figures are closer to 19- 20%
for 2007, with even more inflation expected in 2008.

A nationwide farmer's strike that began in March in
response to higher export taxes on agricultural crops
hasn't helped. Large-scale protests, strike-related
inflation and food shortages were the result, boosting
food prices to new highs. The strike is considered by
local observers as the worst crisis of the Kirchner
era, and played a large part in the April 24
resignation of the Economy Minister Lousteau, the
third Minister in the last year. "I don't know if
it's inflation or the crisis with the farmers or what.
All I know is before, I paid 1.40 pesos for a liter
of milk, and now I pay 2.50", says Lucia Martínez, a
domestic employee.

"It's taking a lot longer for food prices to return to
pre-strike levels", says Miguel Bein, of Estudio Bein,
an economic consulting firm. A 30-day truce between
the government and the farmers was announced on April
2, but the conflict is far from over. "Why should the
crisis be resolved? The government will keep doing
everything it can to keep food prices low, and the
farmers will want to export as much as they can to
take advantage of high international commodity prices.
Different interests are at play."

Argentina remains one of the world's largest producers
of beef, an item locally considered a staple, not a
luxury. To minimize prices at home, the government
banned beef exports; Argentines still only pay 1/4 of
international beef prices. But prices keep rising,
threatening to make the once-sacred weekend barbeque,
or asado, a thing of the past.

"It used to be that you could have your entire Sunday
asado for just 50 pesos" (US $17), says Mrs. Martínez.
"Now just the meat costs 100 pesos. We can only
afford to have an asado once a month, if that."

Two-income families have taken to eating less
healthfully. "We used to eat a lot of vegetables",
says Miriam Ganado, a seamstress whose family income
is US $ 760 per month. "But now, because of the
prices, instead we eat pasta or rice."

"Although it's too early to get accurate data, I
imagine poverty levels are climbing", says Bein. The
Fundación Banco de Alimentos, a food bank founded in
the wake of the 2001 crisis, reports that demand for
its services is growing. The group distributes
donated food to 469 dining rooms throughout the city,
with a waiting list of 200 more. Jacqueline Vines of
the food bank says, "Every day, new institutions
contact us asking for our services. The needs here
are very high." Gladis Alanis, of the Juntos Somos
Más dining room, says that her clientele doubled over
the last year. "This last year was lethal. People
who have jobs don't make enough to eat. Imagine those
who don't?"

Amanda Fernández is an economic development consultant
and freelance writer for www.argentinastravel.com,
living in Buenos Aires.