With General Resolution 5490/2024 in place, which reduces taxes for the importation of food and medicines, COPAL ordered the sectoral chambers to carry out a “accurate diagnosis” to evaluate the impact of the measure. “We are not afraid to compete, but we feel it as a message,” say members of the entity.
The Coordinator of Food Products Industries closely follows the Government’s movements. As a representative of the main chambers of the sector, he turns on a warning light for the decision to facilitate the importation of food and medicines, offering a dollar with access for 30 days and additional VAT tax exemption and Profits for 120 days.
During the traditional Monday meeting, the Executive Committee put on the agenda the need to evaluate the impact of the measure on a sectoral basis, before making a statement. A representative of a food giant assures that “As national industrialists, we do not imagine an invasion of imported products”, but also contemplates that “the scenario may be underestimated.”
The analysis by sector is a prerequisite and necessary so that the entity led by Daniel Funes de Rioja can eventually express its opinion on the decision that, contrary to what the Economy postulates, businessmen assure that was not previously consulted in meetings with the Secretary of Commerce, Pablo Lavigne.
Few dollars and internal lack of coordination
The main question that arises among food companies is the real availability of foreign currency to supply demand. “There is a shortage of dollars“, they say in the sector, the primary factor why the proposal is relatively rejected. They also do not see a pronounced impact on shelves, given that the benefit will only be valid for 120 days.
Despite a decision described before this media as “improvised” and “unintelligent”, due to the untimely nature of its application, the sector recognizes that “they were listened to” by Commerce and included some raw materials in the enabled list, and not only finished products.
This internal dialogue is not necessarily expressed in official discourse. On social network X, formerly Twitter, a user complained about the price of Café Cabrales in capsules: “80% more expensive in Coto (Argentina) that Walmart (USA). There is also no 2×1 or 2nd unit at 70%. “Open imports.”
The Minister of Economy, Luis Caputo, responded that “In a month it will be competing with imported ones, so I don’t think it will sell much more coffee at those prices.”.
That response was part of the conversation within COPAL. It was Martín Cabrales himself who mentioned, with some concern, the official’s comment, after the businessman had raised with Lavigne the explicit need to add raw materials to the list, in addition to packaged coffee.
Prices: supermarkets blame suppliers as they gain ground
In any case, large companies say they are betting on competition. The Government’s final intention is to lower prices on the shelves, and the food companies think that “they can give up some profit margin” to comply with it, although the maximum scenario is a slowdown in prices, and not disinflation.
The statement is in response to the accusation of the supermarket sector, in the classic tension generated when it comes to pointing out culprits for the oversized highlights: “The promotions, although they are displayed in supermarkets, are actions of the suppliers that seek to alleviate the drop in consumption“, although “without giving up their price lists, which consumers no longer validate.” “The promotions have always been there, and supermarkets give them a lot of importance and they only represent 30% of consumption“, responds a supplier.
For Manuel Valenti Randi, researcher at OCIPEx, giant companies “can be harmed” but also “can increase exportable balance”, by losing the internal market and not having quota controls. For their part, supermarkets “can do business with this opening as can importers.”
SMEs, waiting for a single industrial policy
The universe that is convinced to foresee a risky scenario is that of SMEs and local businesses. The hypothesis of price-forming food companies is that, at the cost of giving up profits, they could support a rearrangement of prices, as a result of the entry of more imported products.
But this phenomenon, which if sustained by the first ones, will then extend to second and third brands, will complicate things for small companies: “SMEs will not be able to compete if a first product lowers its prices or supermarkets choose imported ones, because they do not have the back to give up profitability.“, they warn. What is the way out?: “Surely more informality for the small ones. The market will always choose the first brand”they say.
Food rose more than 80% in the first 100 days of Milei
Meanwhile, the numbers produced by the consulting firm Vectorial are worrying: between the first week of December and the second of March, Food increased on average 83%. The rise in water and soft drinks stands out in more than 100%dairy 99%vegetables and tubers 84%oils 81%meats 75% and breads and cereals 74%.
“Part of the problem was devaluing, ironing the official exchange rate and not controlling prices, which generated inflation in dollars. Today food companies make extraordinary profits by charging prices from European countries with salaries from Central America.”, concludes Valenti Randi.
“Prices have already been rearranged, and some even went too far“, a source acknowledges to this newspaper. Of course: he assures that privileging market share over profitability “is a typical practice of mass consumption.”
Source: Ambito
