The Argentine field warns the candidates that with ten different exchange rates “there is no investment”

The Argentine countryside wants to turn the page on this 2023. It comes from one of the worst droughts in its history, which has caused losses of more than 20,000 million dollars, and is buffeted by a currency storm in the middle of the electoral campaign that complicates decision-making. decisions. From Rosario, the agro-export capital of Argentina, businessmen in the sector are demanding a swerve from politics to put an end to the country’s permanent instability and guarantee predictability.

“Every time there is exchange rate instability it is not good. That is the reality of the market, of the companies and it is what we have to try to correct”, said the Rosario president of the IDEA business organization, Enrique Humanes, on Monday. “It is very difficult to manage in a company with ten different exchange rates,” he warned during the IDEA Agroindustry Experience event, which was attended by 350 participants from the sector. “With an exchange gap there is no investment. Without investment there is no employment”, added the executive director of the organization, Daniel González.

Until ten days ago, agricultural exports were settled at around 285 pesos per dollar, the official price. By decision of the Government they went to 340 pesos. But since then the Argentine peso has plunged down the stairs, with new negative records in all prices. This Monday, the so-called stock dollar or MEP, which is what companies use to earn currency, changed to 521 pesos, while green bills were offered on the streets of Buenos Aires at 598 pesos. On Tuesday, the exchange market opened without too many shocks and some official intervention was taken for granted to prevent the blue or parallel dollar from exceeding the 600 barrier before Sunday, when Argentina holds primary elections to choose the candidates for president of each political force.

The Argentine Rural Society (SRA), which brings together large agricultural producers in the country, warns that the Government of Alberto Fernández cannot continue putting patches on an economy that is leaking everywhere. “Corn at 340 may have solved something and it can be seen because there has been a lot of corn sales these days, but on the other hand it has broken the normal commercialization of those who use corn as raw material for their production, such as pork, chicken, feedlots, tamberos (owners of milking farms)… we all saw our production numbers altered,” said the head of the SRA, Nicolás Pino.

Sunday’s results will give clues about Peronism’s chances of staying in power or losing it to the opposition in the October 22 general elections. The Argentine camp does not hide its preference for the opposition coalition Together for Change, but its referents are convinced that whoever wins must change course. “We hope that politics once and for all realizes that this path that we have been taking in the last twenty-some years is no longer going,” Pino told EL PAÍS.

Nicolás Pino, President of the Rural Society during his participation in the IDEA Agroindustria event in Rosario, Argentina. Nicolas Sanz

Record trade deficit

The drought has left the Argentine State without its main source of foreign currency income. Primary exports —led by soybeans— sank 40% in the first half of 2023 compared to a year earlier; manufacturing of agricultural origin, 26%, according to official data. The sum of both accounted for two out of every three foreign sales of Argentina in the first six months of last year, which helps to understand the record deficit in the trade balance in 2023, which was 1,727 million dollars in June.

“I look at countries like Uruguay, like Paraguay, like Brazil and they didn’t take our path, which led us to have shameful rates of poverty and inflation. On the contrary, they have had the drought that we had and they are countries that are moving forward because they have clear and fair rules”, Pino opined.

According to businessmen in the sector, the other agro-exporting countries have benefited from the political and economic turmoil in Argentina. While Brazilian agriculture advances driven by State policies, Argentine producers feel that the national authorities hinder their development with dozens of taxes and exchange restrictions. “How many countries have export taxes? They can be counted on the fingers of one hand”, criticized the president of the SRA. “The producer is tired of paying,” he warned.

Tax evasion is commonplace in Argentina. Some companies under-invoice exports, an illegal maneuver that allows them to evade state controls and keep foreign currency abroad. Others hire undeclared labor. Many of them are reluctant to pay for genetically modified seeds.

According to Ignacio Bartolomé, executive director of Grupo Don Mario, respect for the intellectual property of seeds is above 60% in most countries, while in Argentina it is less than 30%. “In other words, seven out of ten (Argentine producers) do not pay for the technology developed by companies like ours,” Bartolomé remarked. The presence of a widespread illegal seed market —known in Argentina as the white bag— limits the access of the local market to new, much more productive varieties that are grown in other countries and scares away potential investment from agricultural biotechnology developers. During Mauricio Macri’s management, an attempt was made to approve a Seeds law that sought to regulate this situation, but in four years that rule “got old” due to the appearance of new technologies, according to Bartolomé.

short-sighted look

Advances in biotechnology, the threat of climate change and new environmental requirements force producers to modernize to reduce risks and maintain competitiveness. Those who bet on innovation come up against little access to credit and difficulties in making medium- and long-term plans in a context of enormous volatility.

For the director of IDEA Rosario, most businessmen have been limiting their investments to a minimum for a long time, to those necessary to maintain what they have, instead of thinking about expanding. “It cannot be that we are talking about the same thing all day, about how much the dollar is worth, how much is the gap (between the official dollar and the blue) or how much are the withholdings. Because as long as that is the discussion, the investment issue will not be there,” concluded Humanes.

Despite the problems, agriculture looks optimistically towards the horizon. The rains of the last few months are still insufficient for soils thirsty for three consecutive years of drought, but they augur a better harvest than the last. The proximity of a political change, and the hope that the new president will have some gesture towards the sector, makes the days count until December 10.

Daniel González Executive Director of IDEA during his participation in the IDEA Agroindustria 2023 edition in Rosario, Argentina. Nicolas Sanz

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