Despite the fact that the management of the Minister of Economy, Luis Caputo, began with a strong correction of the exchange rate that placed it at $800, the agricultural sector questions whether it will be attractive enough when the time comes to liquidate what was obtained after the large harvest. “This It is a competitive dollar today. It seems that the crawling peg of 2% is insufficient in relation to the expected inflation in the coming months”says a sector leader.
What at first was presented as guaranteed support is now finding its first crossroads. From the field expressed their support for President Javier Milei when his Economy official announced a devaluation and 15% withholdings for non-agricultural exports. According to Caputo, in this way exporters benefit with a better price and the tax burden for all sectors is equal, “stopping discriminating against the agricultural sector.” The measure generated an immediately positive reaction from the head of the Rural Society, Nicolás Pino: “Milei reaffirmed what he always told us, highlighting the sector because the countryside has been discriminated against through taxes that only producers pay. The path is the unification of the exchange rate and the elimination of export duties,” he assured in dialogue with Ámbito.
However, the first exchange was already generated in the meeting held by the Liaison Table with officials from the Ministry of Economy and the Secretariat of Bioeconomy, where it was reported that the intention will be to extend the 15% taxation to all exports of the country. agricultural sector -except for soybeans, which is larger-, thus affecting regional economies.
“We don’t like the measure”was the unequivocal reaction of the main entities and they agreed to analyze the initiative according to the chain of each product. The current management seeks to remedy this first short circuit and assures that it is a temporary measure and that, in exchange, the marketing scheme abroad will be modified.
Now another question appears at the door and it has to do with the exchange rate offered to exporters. With the dollar at $800 and an “80/20” settlement scheme, an exchange rate of $840 will be reached, which after deducting withholdings will be $760. “The situation for improvement was clear,” said Mario Ravettino, director of the ABC Consortium.
But a representative of the cereal sector points out another view: “Yes, it is competitive, but to date. We have to see how inflation and the cost structure evolve in Argentina in the coming months,” he anticipated, while warning: “It seems that the crawling peg of 2% is insufficient in relation to the projected inflationary component.” Inflation projections for December warn that this month will mark the highest price increase of 2023. JP Morgan points out that the accumulated inflation between December and January will be 60% and Milei itself indicated that it could be up to 40% monthly. An exchange rate with mixed settlement sounds attractive as long as it does not lag behind the acceleration of prices for the inputs that the producer needs for planting. Otherwise, they explain in dialogue with this newspaper, the offer will be retracted.
In that context, agriculture seeks clarifications regarding exchange rate policy and, within the framework of a model that seeks greater flexibility in exchange rate movements, “will always ask for more”. “It is one thing if you are going to have a good harvest and another to have the appropriate mechanisms to incentivize the producer to sell to. There is also the failure of not generating reliable investment tools for the producer, who in some cases prefers to save on grains,” says a source representing the field.
For David Miazzo, chief economist of the FADA Foundation, The new exchange rate “will be enough to normalize the market that was completely frozen, but in no way will it generate a large wave of sales.” by producers that generate some significant impact on exports.” From those around Santiago Bausili, head of the BCRA, they assure that the 2% monthly update could be modified if necessary.
The sector has about US$2,000 million to liquidate before the beginning of the thick harvest, in April. These are dollars that the Minister of Economy is counting on in the search for a financial bridge until then. In this framework, the disbursement of US$960 million by the Development Bank of Latin America and the Caribbean (CAF) was also confirmed, to meet the payment of US$912 million to the International Monetary Fund on December 21. There is also speculation with financing from the World Bank, the Inter-American Development Bank (IDB) and Arab countries through Special Drawing Rights (SDR), the IMF currency, which they keep unused. Meanwhile, in the week the BCRA totaled purchases for US$727 million and in the month it accumulates purchases for US$243 million.
Source: Ambito
