Yerba Mate Crisis: Deregulation & Low Prices Threaten Producers in Misiones

The yerba mate industry in Argentina is facing a significant crisis following the deregulation of prices by President Javier Milei. For generations, farmers in the Misiones province have relied on state intervention to stabilize the market for this beloved national beverage. However, the recent elimination of price controls, coupled with a record harvest, has led to a dramatic drop in prices, threatening the livelihoods of thousands of farming families.

Liliana Bayura, a yerba mate grower, now receives just 13 cents per kilogram of leaves, a substantial decrease from previously regulated minimums. This price point makes it difficult for families to afford basic necessities, according to reports from Bloomberg. The deregulation, which began within ten days of Milei taking office, dismantled the National Yerba Mate Institute (INYM), ending the biannual price-setting meetings that had long been a feature of the industry.

The timing of this deregulation coincided with an unprecedented production year. In 2024, Argentina produced 1.1 million tons of yerba mate, a 27% increase from the previous year. This surge in supply has created a significant oversupply, driving prices down by approximately 40% in real terms. While consumers are benefiting from cheaper yerba mate, the economic consequences for farmers are severe.

Héctor Dingler, president of the Cooperativa Dos De Mayo, emphasized the unsustainability of current prices. Speaking to LT17 Radio Province of Misiones, Dingler stated that the lack of profitability discourages producers from investing in their farms, hindering essential tasks like cleaning and fertilization. He noted that the current market situation leaves producers “free at random,” lacking the price support previously provided by the INYM.

The issue extends beyond simple economics. Dingler highlighted concerns about quality control, stating that the absence of regulation allows for inconsistencies in the product, including the inclusion of excessive amounts of stems. He explained that the INYM previously played a role in verifying product quality, a function that is now largely absent.

Despite the challenges, some farmers are adapting. Reports indicate that a few have begun creating branded products, attempting to capture more value in the supply chain. However, this is not a viable solution for all, particularly smaller producers who lack the resources for branding and marketing.

The situation is particularly concerning given the number of families dependent on the yerba mate crop – approximately 10,000 families nationwide. Some farmers are reportedly considering selling their land, while others have already left the industry entirely. The cooperative leader warned that low prices prevent producers from sustaining investment in their farms, and that the current price of green leaf is far below production costs, needing to be practically double what is currently offered.

The Argentine Rural Confederations (CRA) president, Carlos Castagnani, has expressed a controversial view, advocating for a completely free market and suggesting the INYM should only provide guidance on prices, rather than setting them. This stance has drawn criticism from small producers who are calling for a return to the previous minimum pricing system. The CRA president recently visited Misiones and neighboring Paraguayan regions to assess the situation.

The provincial legislature in Misiones is attempting to address the crisis by opening spaces for dialogue, aiming to support producer families. Sebastián Macías, president of the House of Representatives of Misiones, is leading these efforts, seeking to find solutions that can mitigate the impact of deregulation. Meetings have also been held with national officials, including the Minister of the Interior, Diego Santilli, though these have yielded limited results so far.

Dingler stressed the importance of increasing yerba mate exports to alleviate the domestic oversupply. He suggested that exporting at least 120 million kilos would begin to noticeably impact the market, highlighting the need to explore new international markets. Currently, Argentina exports approximately 57 million kilos annually.

While the current situation is dire for many producers, Dingler urged them to remain calm and avoid abandoning their plantations. He emphasized the importance of maintaining farms and waiting for the market to adjust, acknowledging that the current conditions are temporary, though difficult. The cooperative he leads is currently in a favorable economic position, with assured sales commitments to major buyers like the Cabur Group, allowing them to offer better prices to their associated producers.

The deregulation of yerba mate prices represents a significant shift in Argentina’s economic policy, reflecting President Milei’s broader “shock therapy” approach. While the long-term effects remain to be seen, the immediate impact on the livelihoods of yerba mate farmers is undeniable. The coming October midterm elections will likely serve as a test of whether rural support for these free-market policies will persist amidst ongoing agricultural hardship.