When the state tampers with the market, the market has a way of biting back.

Bloomberg News reports:

Argentina plans to apply a law that forces holders of wheat and flour suitable for bread making to sell stock on the domestic market in a bid to contain inflation. Interior Commerce Secretary Guillermo Moreno announced the measure in the official gazette today. The 1974 law allows authorities to freeze prices and obliges companies to maintain supply. Those in breach are subject to fines and imprisonment.

The fact, just perhaps, that exporters can be paid in hard currency (albeit with tough restrictions attached) rather than the peso (a currency with an official exchange rate unrelated to reality) has, I suspect, just a little something to do with this.

Bloomberg continues:

… Argentine wheat production has decreased since 2006, when President Cristina Fernandez de Kirchner’s predecessor and late husband Nestor Kirchner set export quotas. Lousteau was appointed by Fernandez in December 2007 and resigned four months later amid disputes over a bill that sought to increase export duties, a move that led to a four-month farmer protest and failed to move through Congress.
The rising cost of wheat locally has pushed up the price of bread to 20 pesos per kilo ($3.70), double year-ago levels, according to Abeceb.com research company.
…[Interior Commerce Secretary] Moreno closed stores owned by Wal-Mart Stores Inc., Carrefour SA (CA) and Cencosud SA (CENCOSUD) for a few hours yesterday after the government found shortages of some goods. Grocers agreed last month to freeze prices of 500 goods and ensure supply as part of the government’s efforts to stem inflation.
While the national statistics agency said prices rose 10.3 percent in May from a year earlier, private economists estimated prices rose 23.4 percent in the same period.
Last week, the consumer protection agency recommended Argentines combat price increases by baking bread at home, posting recipes on its website under the title, “hot bread, flour at frozen prices.”

Bloomberg adds that Argentina is the largest wheat producer in North South (typo down to me not Bloomberg News!) America.