(Bloomberg) -- Farmers are lobbying against the Argentine government’s proposal to sweeten an offer on its overseas debt with payments tied to agriculture exports.
Economy Minister Martin Guzman, who’s leading talks to restructure $65 billion of foreign debt, has put the idea on the table, though some creditors favor coupons linked to economic growth.
Read More: Argentina Mulls Export Sweetener to Bridge Gap in Debt Talks
The debt sweetener -- which would trigger a payment whenever agriculture exports hit a threshold that’s not yet been specified -- has unnerved farm leaders because it may mean keeping in place unpopular taxes on shipments indefinitely.
“A measure like this would mean export taxes couldn’t be scrapped until the bond matures,” Argentina’s main farming associations said in a letter to the government seen by Bloomberg News. “That would impede tax-relief policies when prices fall or there are weather disasters.”
Ultimately, says the letter sent last week, the sweetener would curtail investments in crop production. That’s anathema to farmers, who want to “ensure our future work is not tied to the whims of a bond.”
The relationship between Argentina’s government and its farm industry, which is key to both tax revenues and bringing in dollars, is straining.
President Alberto Fernandez took office six months ago and hiked export taxes. More recently, the central bank has taken steps to prompt farmers to sell their soy harvests. Dual foreign-exchange rates are also driving concerns about inputs, like fertilizer, becoming expensive.
Read More: New State Soybean Giant Eyed Suspiciously by Argentine Traders
Meanwhile, Fernandez has taken control of Vicentin SAIC, a bankrupt soybean processor, in a move that farmers fear could upset grain markets.
Argentina’s crop exports were valued at $23.7 billion last year.
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