Luis Caputo He returned from Washington with the decision made: agricultural withholdings will be lowered. The measure surprised his team, not because of its application itself, but because of the speed with which it was taken and the reduction scheme that was finally announced. The measure comes ahead of the February 6 meeting which, according to Gustavo Idigoras, president of the Argentine Chamber of the Oil Industry and the Center of Cereal Exporters (CIARA-CEC), will remain in place to “ratify the continuity of the measures announced yesterday.”
According to the sector leader, this is a positive announcement for the producer and the exporter, but the result will depend on the price of the slate, knowing the final conditions. Among the ten tons of soybeans plus four of corn, in total there is a stock of US$2.7 billion without liquidation from the last harvest. There is speculation about a meeting between agricultural leaders and the economic team during the day.
In this interview, the representative of the oil sector tells the impact that the Government’s measure had on the sector and how it will impact prices and the business going forward.
Journalist: What is your first analysis of the measure and what expectations do you have about its operation?
Gustavo Idigoras: It is a positive measure, it was a desire that we had from the industrial sector, the economic conditions of the producers are very worrying, of possible losses because the numbers no longer give the high rates, the Government’s decision will give them economic relief.
At the same time, we will have to see what type of merchandise the producers sell, whether the old campaign stock or they are going to anticipate the sales of the harvest that comes in May -if the weather is good-, considering that this measure is until June.
Q: Do you think the price on the board will convince the producers?
GI: It will depend a lot on the conditions of supply of merchandise in the market. If the improvement in the price is not sufficient for the expected income, the sales flow could be lower and in that case the expectations of foreign currency income by the Government would not be reflected.
Q.: The Government does not mention how much foreign currency it expects to come in with this benefit, but it would be good to know what the unliquidated stock is from the last campaign.
GI: If the producer improves his economic equation, one could suspect that there will be a better sales position than the current one. There is a very dormant grain farm, with a stock level close to 10 million tons of soybeans, when in general the remaining campaign stocks are close to 3 or 4 million tons, which is why it is speculated that they could sell between 6 and 7 million tons, will depend a lot on the final price remaining in the market. Together with the remaining 3 or 4 tons of corn, the unliquidated stock is around 2.7 billion dollars.
Fewer withholdings: the fiscal cost of the measure and the upcoming meeting
Q.: The fiscal cost, according to the Ministry of Economy, is US$800 million. Do you think this drop in revenue is worrying?
GI: It is clear that the economic team is convinced that it will not have a financial fiscal deficit due to the measure it is taking, but it is a fairly anticipatory measure and that is why it surprised us all as well, based on the President’s previous statements about ending to consolidate and confirm the financial surplus.
Q.: After this measure, will the meeting agreed for February 6 with the Liaison Table be held?
GI: I understand that the meeting with the Liaison Table will continue to discuss the continuity of these measures.
Q: What scenario do you imagine after the temporary reduction in withholdings ends?
GI: The post to June 30 will be an issue that the Government must take up, on July 1 the withholdings will return to 33%. We will have to see how management acts in that sense, perhaps they decide to lower withholdings permanently but by a smaller percentage.
Source: Ambito
