Argentina reaps harvest from new farm policies

President Raul Alfonsin is trying to revive Argentina's once-bounteous farm sector as part of an economic program that aims to increase exports in order to meet interest payments on the country's massive foreign debt. Mr. Alfonsin's most important move has been to sharply reduce a tax on agriculture exports that farmers say has discouraged production.

He has also teamed with Australia, Canada, and 11 other nations in an effort to press the European Community (EC) and the United States to cut export subsidies that Argentine officials say have taken away their markets and caused a glut in production that has reduced world grain and beef prices.

Alfonsin's program has begun to show some results.

Agriculture Secretary Ernesto Figueras says that grain and oil seeds production, which had fallen to 32.7 million metric tons in 1987 from 44 million tons in 1985, will rise to 37 million tons this year.

Mr. Figueras adds that the number of cattle, which has been falling since peaking at 60 million 10 years ago, will stabilize at 50 million in 1988.

The US Embassy estimates that agriculture exports, which fell from $6.3 billion in 1984 to $4.3 billion in 1987, will increase to $5 billion in 1988.

``If the government continues its favorable policies, next year's harvest will be even better,'' says Guillermo Alchouron, president of the Argentine Rural Society, the biggest farm lobby.

But many farmers remain unhappy and say that the government hasn't done enough to boost them out of their precarious state.

They complain that monthly real interest rates of 13 to 17 percent make borrowing prohibitive and that the exchange rate they receive for exports is currently 35 percent less than the free-market rate.

Because of high interest rates, Argentine farmers, unlike their US counterparts, have little debt.

Farmers here face many other problems, though.

Land values have declined 25 percent since 1980, and 15 percent of the nation's farmers have liquidated their holdings over the past 10 years.

``We're in bad financial shape,'' says Thorleif Iolster, an Argentine farmer of Norwegian descent. ``I don't think there's any farmer prospering today.''

Farmers have so little cash today that tractor sales are down 50 percent from a year ago.

``Equipment is practically worn out,'' says Dawson Ahalt, the agricultural attach'e at the US Embassy in Buenos Aires. ``You see equipment here that looks like it belongs in a museum.''

Compounding farmers' problems, the country once again is mired in recession, and inflation in 1987, as it has been for every year except one since 1975, was above 100 percent.

Times were not always tough on Argentina's humid grasslands.

In fact, thanks to a rich soil and climate that allows year-round farming and ranching, farm exports made Argentina into one of the world's wealthiest countries in the years leading up to World War II. Even today, agriculture accounts for 70 to 80 percent of exports and 15 to 20 percent of gross domestic product.

Farmers' problems began in the late 1940s when President Juan Per'on decided to build a mighty industrial sector by taxing agricultural exports.

Lately, the farm policies of many other countries have made life even harder on the pampas, the rich flatlands in Buenos Aires province and neighboring provinces. The area is roughly equal to Iowa, Nebraska, Kansas, Missouri, South Dakota, and Illinois combined.

Over the past 20 years, Argentina has lost export market after export market, beginning with its biggest customer, the EC, whose members subsidized local production to build up self-sufficiency in case of war.

To make up for losing its European markets, Argentina then increased exports to Latin America, Africa, and the Middle East.

But in the past few years, as the EC has built ever-growing surpluses and has been selling its excess grain and beef at discounts overseas, Argentina has lost many of its newfound markets as well. Then in the past two years, Figueras says, the US has taken additional Argentine markets in seeking to counter EC subsidies with its own Export Enhancement Program.

The US and EC export subsidies have also driven down beef and grain prices over the past two years, says Peter May, an Australian diplomat here and critic of the subsidy programs.

Altogether, the US and the EC - either through direct export subsidies or from the price decline blamed on their excess production - have cost Argentina $11.5 billion in exports over the past five years, Figueras says.

He adds that the loss in revenue has squeezed Argentina, which has a $54 billion foreign debt, the third largest in the developing world.