The real income of farmers decreased despite the fact that the management of Javier Milei devalued the peso by 118% in December given that, although The jump in the exchange rate at the end of last year increased their nominal incomethe real ones, that is, their purchasing capacity fell.
This is what it indicates a report from the Latin American Strategic Center for Geopolitics (CELAG) that compares the purchasing capacity per quintal of corn, soybeans and wheatbetween May 15, 2024 -under the anarcho-capitalist government of Milei-, and November 30, 2023 -under the leadership of Massa-, in terms of 11 commonly consumed products.
“The result is overwhelming. In all goods, the purchasing capacity of agricultural exporters fell. That is, despite the devaluation aimed at improving his income, the farmer is worse or the same as he was when Massa ran the economy,” they warn.
The fall in the purchasing power of agricultural exporters
And it is that, yes With one quintal of exported corn, with Massa you could buy 72 packages of diapers, with Milei you can buy only 42 (a 45% drop in purchasing power). With a quintal of wheat, he could buy 96 liters of oil in Massa’s time, and now he only gets 75 liters, which reflects a 22% drop in purchasing capacity.
Likewise, with a quintal of soybeans could buy 145 kilos of rice in the previous government and, now, it can access 111 kilos. Meanwhile, in terms of kilograms of onions and salt, the drop in purchasing power is greater than 40%. And with one quintal of soybeans, with Massa you could buy 324 liters of milk and 184 kilos of bread, while now it is enough for 211 and 119 kilos respectively, 35% less.
And finally, in terms of the capacity to build there were no variations. With each quintal of soybeans, wheat or corn, a farmer can build the same square meters than before the devaluation.
“In some products, the reduction in purchasing capacity during Milei’s government was moderate, as in the case of grass, which decreased by 2%, or meat, which fell by 4%,” summarizes the CELAG report. . For the set of 11 goods, The average drop in purchasing power was 23%. That is, an additional devaluation of 23% would be needed for them to remain in the same conditions of purchasing capacity as they had with Massa.
What was the devaluation for?
Any devaluation, in theory, should provide a benefit to exporters -by increasing the pesos it receives for each dollar exported-, at the cost of a sacrifice for the rest of society because its income measured in dollars and the purchasing power of its income in pesos fall -products that are traded internationally immediately increase their price in pesos.
The Milei devaluation not only decreased the real income of familiesbut also damaged the purchasing capacity of exporters.
The calculation of the monetary income was made based on commodity prices in force in the first week of May (we assume the same price to allow comparison), discounted withholdings, marketing and fobbing expenses and settlement at the Blend exchange rate, that is, 80% of the settlement is made at the official exchange rate and the remaining 20% at the parallel exchange rate (See table 3). The financial asset is the blue dollar and the 11 products are: square meter of construction, diapers, oil, meat, bread, rice, chicken, grass, milk, onion and salt.
Source: Ambito
