The ramifications from the failed attempt, almost five years ago, by Argentina's leftist president, Cristina Fernandéz de Kirchner, to raise export taxes on soyabeans, sunflower, wheat and maize are still impacting on the country's agricultural sector.
Just before Christmas, the government nationalised the 12 hectare exhibition ground near central Buenos Aires owned by the Sociedad Rural, one of the country's most important farming interest groups, which led to a one-day farmers' strike after Christmas.
Whilst the move was largely symbolic, it highlighted the on-going interventionist approach of the government, which continues to damage the profitability of the country's agricultural sector.
Beef production
Nowhere has the impact of distortionary government policy been greater than in the beef sector.
Just six years ago, Argentina's cattle herd size stood at 60 million, but, at the end of 2012, had fallen to 49 million.
Though other producers, such as the US, have experienced a similar trend, the slide was accelerated in Argentina due in large part to government policies, affecting both the demand and supply side.
Argentina was once synonymous with its beef exports, but it now risks becoming a minor player on international export markets.
Exports in 2012 were 74.8% below the same period in 2005, the year in which Argentina had the highest level of exports since the late 1970s. In 2005, it sold 608,000 tonnes of dressed carcasses, but only 153,136 tonnes in 2012, slipping from fifth place for global exports to 11th place last year. Argentina was the only beef producer in South America to see a fall in exports.
In contrast, neighbouring Uruguay, also governed by a leftist president, though more pragmatic, saw exports increase by 23%.
Although Argentina is the largest EU beef quota holder with 29,375 tonnes, representing over 44% of the total allocated to eligible nations, last year it managed to export only 64% of its allocation.
Key factors affecting exports are the exchange rate and export taxes, which have eroded the profitability and competitiveness of the sector.
The official exchange rate of the peso currently stands at 4.95 to the US dollar, a level which most economic experts consider overvalued and is damaging to Argentina's export potential. The industry has also to contend with export taxes.
For thermally processed meat, producers pay a tax of 5% of value and all other products pay a tax of 15%. The sector had been hoping for a reduction in tax, but the government have not been willing to concede this.
The beef sector's competitiveness and profitability have been further dented by runaway inflation. Discredited official Argentine data suggest that the Consumer Price Index rose by almost 70% from 2007 to the end of 2012, but private estimates put the total hike in prices at more than 200%.
With costs rising faster than productivity gains, the whole beef sector has become risk adverse to investment, leading to a drop in output.
Not only has the sector to contend with competitiveness issues, but the ability to export can be constrained by the government, as it seeks to direct supplies to the domestic markets in order to keep local prices low.
Until last year, the government was highly discretionary in the award of export permits. Whilst it is now more willing to give out permits to anyone who requests them, it is currently more economic for processors to sell beef into the domestic market. Should the domestic beef price rise again, the government may well limit exports other than 'Hilton cuts' (high-quality beef) for the EU market.
The domestic market is also facing challenges. In the first half of 2010, Argentines ceased to be the world's main consumers of beef when they were overtaken by Uruguay, with an average per capita consumption of 58.2kg.
According to the Chamber of Commerce for the Meat sector, CICCRA, on average, Argentines consumed 55.5kg per capita in 2011, the lowest level in over 90 years. The decline in domestic consumption seems to have bottomed out in 2012, but remains historically low and may fall further.
Whilst changing tastes and health consciousness are causing a downward shift in the domestic demand curve for beef, the biggest factor in the fall has been runaway inflation.
Dairy Sector
After growth in milk production by 24% since 2007, Argentina's growth has come to a halt. In 2012, production remained flat at 11,600 million litres. The dairy industry association, CIL, estimates that production will remain stagnant this coming year.
Despite the stabilisation in production levels, capacity in the processing sector is expected to grow by 10%. Growth will come from a focus on more value added products, particularly powdered milk and, to a lesser extent, cheese, with a rise in exports predicted.
Miguel Paulón, president of CIL, is optimistic about export prospects. "A lower level of production in the principal dairy exporting countries and the persistence of high current global rates of dairy consumption should be beneficial to the sector."
However, producers are seeing their margins under pressure, which will hold back the sector from growing in the short to medium term. Smaller producers are particularly affected.
Producers earn 1.50 pesos (22c) per litre of milk delivered, which has been subject to a price freeze, but, on the supermarket shelves, milk is retailing at 5 pesos (75c) per litre.
The difference is even greater in the case of cheese, which is more expensive in Argentina than in Europe. Like all other sectors, rising costs of feedstock and inflation in general have put producers under enormous pressure, with costs rising by a staggering 139% between 2008 and 2012.
Biodiesel
Since the production of biodiesel began on an industrial scale in 2006, annual growth has been in the order of 158% per annum. Up to three years ago, practically all of it was destined for the export market, but, in 2010, a B5 mandate was introduced in Argentina, which was subsequently increased to B7.
There was an expectation that this would be raised to B10 last October, however, the Government dropped plans for its introduction.
In 2011, biodiesel exports reached a record 1.69 million tonnes, but fell significantly in 2012. Spain, the largest export market for Argentine biodiesel, banned its import following the nationalisation by Argentina of Repsol's Argentinian oil subsidiary, YPF, though these measures were reversed at the end of last year after a formal complaint by Argentina to the World Trade Organisation.
Nevertheless, uncertainty looms going forward, as Argentina struggles to regain market share after the lifting of the ban and as it awaits the outcome of the EU's investigation into alleged biodiesel dumping in the EU market.
It is now expected that the phenomenal growth is coming to an end. Not only is the export market contracting, but the domestic market may also shrink.
Up until recently, the biodiesel sector had been relatively free from political meddling, but, like all areas of the economy, the Government has started to more actively intervene.
In order to raise taxes to sustain high levels of social spending, ast the behest of deputy economy minister, Axel Kicillof, export taxes on biodiesel were raised from 14% to an effective rate of 24% last autumn.
Following an outcry from the industry, the tax was reduced to 19.11%. In addition to raising the biodiesel export tax, the government cut the fuel's guaranteed domestic price to 4,405 pesos (about US$942) per tonne from 5,196 pesos per tonne.
There were fears that small-scale producers would go out of business due to higher export taxes and lower domestic prices.
Eventually, the Government reversed this measure too, putting in place a tiered system where small and medium sized biodiesel producers will receive a higher price and the larger 'integrated' groups that also produce grain and soybean oil, the raw material of biodiesel, will receive a lower price for their output.
Grains
Notwithstanding the wet climatic conditions which will reduce expected yields this season, the area under wheat and maize continues to contract.
The area planted with wheat in 2012/13 was the lowest in 110 years and maize saw a 12% reduction in the hectarage planted for the 2012/13 season.
Argentina's policy of keeping domestic prices low for staples such as bread and pasta to protect poorer consumers through the use of tools such as export taxes and other policy instruments is decimating the wheat and corn sector.
Under the export licensing regime, known as the 'ROE Verde', which restricts export volumes, the government announces on an annual basis the total allowable wheat and maize export volumes.
A key factor in the production planning phase for farmers is the total exportable volume, as access to the international market, which offers higher prices, is a key investment signal for growers.
The announcement is supposed to take place each November, but its timing is becoming more and more erratic. Such short-term thinking by Argentina's government will lead to a further drop in the area planted.
Many farmers are instead planting barley, as it is not subject to such export restrictions.
Barley production has increased from 800,000 tonnes in the 2005/06 growing season to an expected 5.2 million tonnes in 2012/13.
