The economic and productive team that leads Sergio Massa decided to move forward with a series of measures with which it seeks to increase the reserves of the BCRA in at least US$2,000 million (only contemplating the agro-industrial sector) and in this way await the arrival of some US$6,600 million that would assure the Government peace of mind to reach the elections with the control panel under control.
The central axis of these measures, which from the Ministry of Economy call “Tax Package”is to put pressure on the outflow of dollars via imports and seek by all possible means to increase agricultural exports.
As for the so-called “agro dollar”it was confirmed what Ambit anticipated: it is an update of the exchange rate and corn is incorporated into the crops that were already included in this particular edition of the Export Increase Program.
The measure itself has two negative aspects that must be considered: one of them is the monetary issue that entails paying $340 for each dollar when in reality -despite the new import taxes- the Central Bank sells them at a lower exchange rate. The other point is even more complex and is directly related to the great ghost that afflicts the ruling party in electoral times: inflation.
Jorge ChemesPresident of the Argentine Rural Confederations assured Ambit that “This type of measure increases mistrust and does not create an environment conducive to increasing production or investment in technology”. In addition, he took the opportunity to question another aspect of the new measures, related to the Tax COUNTRY Goods, which will increase production costs by 7.5% by taxing imports of inputs for production. More taxes lead to an increase in costs that translates into higher prices in the last mile of the production chain.
As of today, the phytosanitary market will begin a realignment process, since in recent weeks several companies that provide inputs have virtually left the market.
As for the “dollar corn”, it has been known for some time that it could cause more problems than solutions. From Maizar (the chain that brings together corn and sorghum producers) they rejected the measure and detailed that the new exchange rate “It generates huge distortions throughout the value chain” and also “distorts the corn market to export and to industrialize locally.”
MAIZAR’s fear translates into the fact that this measure could have a strong impact on basic basket products, although the government dismissed this possibility. The question that still has no answer is what the Government will do to avoid a rise in beef, pork or poultry when the price of corn increases. In the case of a chicken, it represents more than half of the productive cost.
NEW COMPENSATIONS
as far as he could tell Ambitthe Ministry of Agriculture, Livestock and Fisheries will compensate pig and poultry producers for an increase in the price of corn. A positive aspect is that both sectors were receiving some kind of benefits, therefore the bureaucracy should not be an obstacle. The issue will be timing, because inflation usually hits the shelves much faster than compensation for agribusiness.
It is clear that with these new measures, the price of corn will gain momentum in the coming days, despite the fact that the Government ensures that the cereal for the domestic market is assured.
Today there would be more than 6.5 million tons of corn in the hands of producers and although it is true that with a dollar corn the crop will increase in price in the domestic market, many discount that this increase will come anyway in a few months, when domestic consumption (feedlots, poultry, pigs) will look for the available corn. At that time, the price pass will be very fast.
By then, the Ministry of Domestic and Foreign Trade should enter the scene to prevent products such as meat, be it pork, chicken or beef, from having a sharp price increase between now and the end of the year. It seems that the concern about the increase in inflation has passed to the background. Today the priority is dollars.
Source: Ambito
