African Entrepreneurship Records 2

Chapter 1500: Argentina’s Economic Collapse

This action in Ubangi Province is just a microcosm of the nationwide ecological protection in East Africa. In addition to protecting the rainforest in the south, Ubangi Province has also closed down some farmlands and plantations in the province.

Under today's economic situation, the problem of agricultural surplus is becoming increasingly serious, even more prominent than in the same period of time in previous lives, especially the extremely serious decline in food prices.

Before the economic crisis broke out in 1929, the world's major grain importers were Britain, Germany, Italy, Japan and the Netherlands. The total grain imports of these five countries were over one million tons. Belgium followed closely behind with imports of nearly tons.

The situation in the UK is rather special, so the UK does not need to over-develop agriculture. India, New Zealand, Australia, Canada, etc. can all supply food to the UK. Germany, Italy, Japan, the Netherlands, and Belgium are characterized by relatively developed industries, small land areas, small arable land areas, and extremely high population densities.

Apart from these industrial countries, the countries with greater demand for food are basically some backward agricultural countries and colonies without status, such as India, which has no "human rights" among British colonies. This means that India, a major food-producing country, needs to import hundreds of thousands of tons of food in some years.

Looking at other British colonies, Canada, Australia, New Zealand and South Africa, they all lived very well and were important food exporters.

Of course, the reason for the plummeting food prices can perhaps be attributed to the "long-term peace" of the international community. From the end of World War I to the outbreak of the economic crisis, world agriculture can be said to have ushered in an unprecedented development. The level of agricultural mechanization has been improved, and the output of pesticides and fertilizers has increased. Coupled with the relatively peaceful environment, it is not surprising that agricultural output continues to increase.

In particular, the outbreak of agriculture in East Africa, the United States, Canada, Australia, and Argentina can be said to be the most important driving force behind this agricultural crisis. Among them, Argentina, the smallest country in terms of area, has a land area of ​​nearly three million square kilometers.

Moreover, these major agricultural countries have basically achieved agricultural modernization at the current level. They have large arable land areas and high unit outputs. A sharp decline in food prices is an inevitable trend. However, they collapsed together with the tide of the economic crisis.

Rhine City.

Hans Layton, Minister of Commerce of East Africa, held a data sheet in his hand, reporting on the current situation of the world agricultural crisis.

"The current international price of wheat is less than half of the level in the first half of 1929, and the decline has exceeded %. The world's major wheat exporting countries have suffered extremely heavy losses. Especially Argentina, Australia, Canada and other countries have suffered the greatest losses, while the situation in the United States is relatively better."

In 1930, the Soviet Union had the largest wheat output among the world's wheat producers. However, the Soviet market itself was relatively closed, so it was not greatly affected. Moreover, the Soviet Union not only did not have the problem of agricultural overcapacity, but also hoped to further expand production to solve the problem of food and clothing in the country.

Although East Africa is also a major wheat producer, rice is the top staple food in East Africa, and wheat even needs to be imported to meet domestic demand. Therefore, as long as the policy is slightly adjusted, the fluctuation of wheat prices in East Africa will be small.

The United States is the world's second largest wheat producer. Currently, the domestic wheat price in the United States has fallen by more than 30%, but this is much better than in Argentina, Canada and the like.

The main reason for this situation is the different national conditions of major wheat producing countries. For example, in the Soviet Union, the agricultural technology level was relatively backward, the degree of mechanization was low, and the population growth rate was fast.

In East Africa, changes in agricultural structure have caused a decline in wheat planting area in recent years.

Although the United States is the world's second largest wheat producer, it has a large population of over 100 million and a large domestic market demand, so the losses are not the most serious.

Argentina, Canada, and Australia, on the other hand, have wheat production that is in no way inferior to other major countries, and their agricultural technology and mechanization levels are relatively high. At the same time, their countries have vast land and sparse populations, low domestic demand, and are extremely dependent on the international market.

Especially the UK. Before this, the UK was the most important grain importer for these three countries. However, the total population of the UK is only more than 40 million. To put it bluntly, any one of these three countries can meet the UK's domestic wheat import needs.

Therefore, under the agricultural crisis, these countries suffered the most losses. Canada and Australia are relatively better off, after all, they are Britain's own sons. On the contrary, Argentina is in great danger.

Hans Layton said: "According to our latest data, Argentina's exports have almost collapsed. The price of wheat alone has plummeted by more than 60%, the price of beef has fallen below 50%, and the price of corn has even fallen below 70%."

"Argentina is a wealthy agricultural country, but due to the agricultural crisis, Argentina is on the verge of bankruptcy."

"At the same time, due to the outbreak of the British economic crisis, British capital has also withdrawn a large number of times from Argentina since last year, which has caused the capital chain of Argentina's railways and ports to break, making it difficult to maintain operations."

"Argentina's foreign exchange reserves have been basically depleted, the peso has depreciated significantly, and the unemployment rate is over 25 percent, even more exaggerated than highly developed industrial countries such as the United States and Germany."

"This also means that Argentina is likely to face a social and political crisis and its economy will fall into long-term difficulties."

The fact is just as Hans Layton said, the previous Argentine military government came to power for this reason, and since then Argentina has started its long road of decline.

Of course, this is also due to Argentina's lack of vigilance. The 20s can be said to be the most prosperous era in Argentina's history, with per capita income levels not inferior to those of European, American and African countries.

If the Argentine government had invested more money in industry in the past decade, it would not have fallen to this point today. Anyone with a little international vision knows that with the increase of new agricultural production areas in the world, Argentina's good days relying on agriculture will eventually come to an end.

The agriculture in the British colonies alone, especially Canada, Australia, New Zealand, and South Africa, was developing at a speed visible to the naked eye. Moreover, there was a high degree of overlap in the types of agricultural products with Argentina. It was only a matter of time before they replaced Argentina.

This is indeed the case. In the past, Britain officially launched the Imperial System of Preferences in 1932, giving priority to importing food from Canada and Australia to protect its own agriculture.

Regardless of whether they are close or distant, it is only a matter of time before Britain completely and clearly abandons Argentina.

Not to mention Argentina's almost dispensable industry, if their agriculture had been able to make some adjustments before, perhaps it would not have fallen to the point it is today.

For example, Argentina's agriculture seems to be flourishing, using the most advanced planting technology, introducing excellent varieties, and a good degree of mechanization, but these are all illusions. The agricultural technology is indeed at the international advanced level, but it is highly dependent on support from the UK. In terms of varieties, it does not have its own breeding institutions, and agricultural machinery is completely dependent on imports and cannot be produced by itself.

As a result, after the withdrawal of British capital, Argentina's agriculture was not only severely hit, but it even lost the ability to develop independently.

Argentina also has major problems in its agricultural structure. The two most important agricultural products, wheat and beef, can be easily replaced. If Argentina had been able to grow more other agricultural crops before, perhaps the situation would be better.

Just like East Africa, since this century, it has been developing its agriculture by leveraging its strengths and avoiding its weaknesses in accordance with local conditions. In this way, even if an agricultural crisis breaks out, it will not be completely wiped out.

In a sense, Argentina's performance is not as good as those oil-rich countries in the Middle East in the past. After all, Argentina does have the potential to develop industry. Its climate, resources, water sources, ports, etc. are not bad. However, the Argentine government has wasted the funds obtained during the rapid economic development stage.

In the future, it will be difficult for Argentina to obtain the same development opportunities as in the early 20th century.

If old Pelosi of Paraguay had gotten Argentina's script, Argentina would not have ended up in its current state. It would have been very likely that Argentina would have been able to turn into an industrial country with the money earned from agriculture.

Crown Prince Friedrich said: "The lessons of Argentina also prove that the empire's previous efforts in agricultural policy were in the right direction. Over-reliance on agriculture, unreasonable agricultural structure, and over-reliance on the international market are the main reasons for Argentina's current predicament."

Now, East Africa does have reason to be proud. Among the many major agricultural producing countries, East Africa has been the least affected, except for countries with limited industrial levels such as the Soviet Union, India, and the Far Eastern Empire.

Under the government's forced intervention, the relatively reasonable agricultural scale has maintained the overall stability of the supply and demand of East Africa's agriculture. Agricultural output has basically increased with the population growth rate in East Africa. In this way, even after the agricultural crisis breaks out, East Africa has enough space to escape safely.

Just like after the implementation of the "Ecological and Environmental Protection Act" in East Africa at this stage, the problem of overproduction in East Africa's agriculture will basically be solved, thus ensuring the smooth implementation of East African agriculture.

At the same time, East African governments have been committed to cultivating a diversified agricultural structure for many years, which has also slightly improved the risk resistance of East African agriculture and reduced the negative impact of international agricultural product price fluctuations on East African agriculture.

Of course, in this environment, agriculture in East Africa inevitably suffered a certain degree of loss, but it was still within an acceptable range, and it did not lead to the situation where the United States later destroyed large tracts of farmland and poured milk directly into the river.

Hans Layton said: "In the current international market environment, the less investment in agriculture, the less loss. Now, no matter how much we improve agricultural production efficiency and technology, it is impossible to solve the agricultural crisis, because before the economic crisis, farmers and enterprises also thought so."

"As a result, instead of crushing their competitors and monopolizing the entire market, they ended up killing themselves as well."

"The fundamental solution to the agricultural crisis is to resolve the relationship between supply and demand, reduce supply and expand demand. Only by doing both can we get out of the shadow of this agricultural crisis."

The situation in Argentina also fully illustrates this point. Needless to say, the demand side is that Argentina's agriculture is mainly export-oriented, so in this direction, Argentina has to rely on others and cannot make its own decisions.

After all, an industrial country like Britain could rely on its powerful ships and guns to open up markets in other countries in the past, but an agricultural country like Argentina is completely powerless and they don't even have a decent civilian shipbuilding industry.

On the supply side, Argentina had previously held on to agriculture and refused to let go. In order to continue to expand its profits, it frantically and blindly expanded agricultural production and increased investment in agriculture, just like those American stock investors. Once the agricultural crisis came, it was completely exposed and collapsed.

In fact, this also fully demonstrates the fragility of attempting to rely entirely on agriculture to maintain a country's economic development in the industrial age.

For those industrial countries, no matter how modernized Argentina's agriculture is, it does not have much technological content. Moreover, the world is so big that there are many places that can replace Argentina. Therefore, Argentina's agricultural economy is very fragile and superficial.

This is not like those countries that rely on oil to get rich. After all, there are many areas suitable for agricultural development, and the distribution is relatively even. But resources like oil depend on geographical endowment. If there is, there is, and if there is not, there is not.

For example, the agricultural conditions in East Africa and Australia are not actually that good, at least far inferior to Argentina's natural conditions, but the agricultural development of the two countries is no worse than that of Argentina, which can be achieved through transformation. However, East Africa cannot create oil out of thin air, so it has to take risks and grab it overseas.

Finally, during an economic crisis, the risk resistance of industrial countries is always stronger than that of agricultural countries. After all, industrial countries still have one last option, which is to pass on the crisis through war.

Countries like East Africa and the United States are even more unreasonable. Their industries and agriculture are very strong. This also means that even if an economic crisis breaks out, the two countries will be able to hold on to the end, outlast other opponents, and finally wait for a new round of world economic recovery.

After all, the only source of income for an agricultural country is agriculture, while big countries like East Africa and the United States, in addition to industry, are also very strong in agriculture and have an advantageous position in competition with other countries. Any industrially strong country has a strong agriculture.

Except for countries like Germany, Japan and Italy which are restricted by the area of ​​arable land, this can only mean that their agriculture is restricted by natural conditions, but it does not mean that their industry is weak.

Therefore, industrial countries themselves are launching a dimensional attack on agricultural countries in the industrial field, and in agriculture, agricultural countries are also unable to compete with the former. This also shows how difficult it is for agricultural countries to turn around.

Only by developing industry can there be a possibility of changing one's destiny. Argentina had such an opportunity but did not seize it. Instead, the Soviet Union created conditions even without any conditions to achieve industrialization. This is the difference in vision between Argentina and the Soviet Union.

After all, the conditions for the development of industry, especially light industry, in the Soviet Union were not good. For example, the climate was cold, there was a lack of industrial raw materials such as cotton, additional factory construction costs were required, such as supplying heating to factories during the long winter, and relatively high logistics costs.

That is, in heavy industry, the Soviet Union had some natural advantages, but these advantages were not obvious. For example, in terms of resources, the Soviet Union was indeed rich in resources, but the development costs were high and were restricted by the cold climate and geography, especially the mineral resources in the Siberian region.

In general, the Soviet Union's own industrial development foundation was only mediocre and was subject to sanctions and restrictions from the international community, but they were also better than the Argentines at making full use of existing conditions.

(End of this chapter)