Economic Storm Batters Argentina's Breadbasket

"The fall in prices has been huge, 30 to 35 percent," says farmer Héctor Farroni, left, shown with agronomist Walter Guillaunmet. "The months ahead will not be easy." (By Silvina Frydlewsky For The Washington Post)

"In my view, the announcements will be ineffective because the government is underestimating the damage to confidence, evident in capital flight, dollar demand and pressure on the peso," said Fergus J. McCormick, senior vice president at DBRS.

Here on the pampa, everyone is feeling the contraction, from farmers to shopkeepers to the local John Deere dealers.

Juan Carlos Digilio, who has sold farm equipment for 26 years, recalled how, back in February, a ton of soybeans sold for $368. Now Argentina's principal cash crop fetches less than $200 a ton. The result is that sparkling new harvesters that go for up to $420,000 sit in Digilio's parking lot, with no buyer in sight.

"The sales here have dropped by 60 percent, to give you a figure," Digilio said.

Just outside Alfonzo, Farroni gives two visitors a tour of his corn and wheat fields. A barn holds an aging red tractor, and the farmhouse where he raises four children could be straight out of the American Midwest. With the sky a bright blue and a brisk wind turning an old windmill, it is a bucolic scene.

But all Farroni thinks about now, he said, is how to stay afloat financially.

"We are among the most affected, and facing a high probability of disappearing, unless there are some big changes," he said. "We are at the point where we cannot be competitive here in these fields."