December 5, 2014
Argentina’s state bank, Banco Nacion, has directed its branches in the country’s farm belt to reduce or stop credit to farmers hoarding soybeans. Farmers in the world’s third ranked soybean exporting country and top soymeal supplier, have been hoarding an estimated 8 million tons of last year’s soybeans as a hedge against soaring inflation which has reached 40%. Hopes are that if the measure works and farmers are forced to sell, the government will be able to collect on the 35% tax it has placed on exports. Banco Nacion finances approximately 40% of Argentina’s agricultural production translating to $300 million in credit to soybean growers. The government is growing increasingly intent on obtaining foreign exchange – despite recent tightening of currency controls to support the peso, bank reserves have fallen 6% to $28.9 billion this year.
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