Ignacio Kovarsky, president of Carbap: “It is time to give clear signals and lower withholdings”

He agroconsidered the economic engine of Argentina, is going through a period of enormous tension: while some relevant companies announce defaults in the payment of their obligations and producers advance blindly and with few options in a sinuous campaign in terms of profitability, the union sector seems be somewhat numb to the pressing reality of thousands of producers.

In this context, the statements of some more seasoned entities are surprising – although they should not be – such as the case of the Confederation of Rural Associations of Buenos Aires and La Pampa (Carbap). Your president, Ignacio Kovarskyreignited the debate on the economic and political direction that affects the agroindustrial sector and asked for clear signals that lead to a reduction in export duties.

In dialogue with Scopethe owner of the entity He was forceful when warning Javier Milei that “If you do not want to continue losing producers, it is time to give clear signals and lower withholdings”. Recently, several productive entities expressed their concern about the pressing tax burden borne by agriculture, where municipalities, provinces and the national state have, each in a different proportion, a responsibility that erodes the accounts of productive establishments.

These problems, combined with a drop in international prices and a recent drought, aggravate a scenario where profitability became an almost unattainable challenge.

The mayors, the rates and the demand for transparent management

The protest against mayors who increase rates disproportionately is not new, but in recent months it has taken on an alarming dimension. According to Kovarskymany municipalities implemented increases of more than 200%, without this translating into a tangible improvement in services, such as the maintenance of rural roads.

According to the owner of Carbap“the mayors did not understand that Argentina needs a change. Producers, the main economic supporters in many towns, feel that instead of encouraging investment, local authorities apply measures that suffocate economic activity. These resources should be reinvested in the people, but many times they end up in festivals and cultural events that do not correspond to the crisis that the country is going through.”

In towns such as General Viamonte, San Pedro or Carlos Casares, the tax increases generated indignation among producers. Added to this situation is the high percentage of municipal budgets allocated to salaries, in many cases exceeding 65%. This model, according to Carbap, is unsustainable and disconnected from the true needs of the population.

The profitability of agriculture, in cagone

The picture becomes even darker when the profitability of the agricultural sector is analyzed. International commodity prices are falling and the high cost of inputs leaves negative margins in many activities. For small and medium producers, the fiscal pressure is felt more intensely, especially in a context where withholdings remain intact.

According to Kovarsky, “on rented fields, the profitability is practically zero and on owned fields it is barely enough to cover basic costs. This situation not only slows down investment in machinery and technology, but also puts the continuity of thousands of producers at risk.”

According to recent data from the Agricultural Foundation for the Development of Argentina (FADA)taxes represent an increasing portion of agricultural income, accentuating the crisis. The State keeps $64.30 for every $100 of agricultural income. The index rose 2.8 points since the September measurement, mainly due to the drop in prices and the lower effect of the export dollar and compared to December 2023 it is 5.4 points higher.

Neither reduction of withholdings nor meeting with the field

CARBAP’s position is clear: comprehensive tax reform is urgently needed to reduce tax pressure and encourage production. According to Kovarsky, “the field is ready to respond with more and better production, but we need conditions that make it viable.”

This possibility seems to be very concrete, since as an exercise FADA proposed that if the withholdings disappeared, the State’s participation would be 36%. Nicolle Pisani ClaroChief Economist of the foundation, highlighted that “this scenario would not only be positive for the producer but would allow new jobs and greater investments to be generated. It would also imply greater movement in different regions of the country and growth in various areas of society; In short, it would be positive for all Argentines.”

Kovarsky stood out in dialogue with Scope the progress made in the first year of the president’s administration Javier Mileiespecially in terms of macroeconomic stabilization. However, he stressed that there is a long way to go. The elimination of withholdings is, for CARBAP, a pending issue that will set the course of the sector and the country in the coming years.

When asked about the possibility of a meeting between the Liaison Table and Javier Milei, the rural leader pointed out that “it is a crucial moment to sit down with the president and tell him that if he does not want to continue losing producers, if he wants to have production and genuine producers , it is time to give clear signals. Milei met with an agricultural entity but not with the field. The field is four entities, so if you do not meet with the field you will not have the true picture of what is happening and what the producers are experiencing.”