After holding a forum at the beginning of the month that brought together a large part of the agricultural production chains, the United States Chamber of Commerce in Argentina (AmCham) seeks to strengthen what they internally call “agricultural work group”, made up of more than a dozen companies that have origins in the northern country and at the same time have a strong presence in the local market.
With the idea of promoting the sector, offering ideas and at the same time raising future challenges, the members of said table created the Agroindustry Program. In this context, this Tuesday the representatives of CNH Industrial, Agco, John Deere, Cargill and Albaugh participated in a meeting with the press where they They proposed the necessary lines of work to take advantage of the strategic opportunity that high international demand for food implies for Argentina.
There are undoubtedly short- and medium- or long-term agendas. Perhaps the most tempting is the second, where the possibilities of promoting investments appear or even the illusion of winning new markets to make a business that in our country is at a stage close to maturity bigger. However, historical, constant and extremely necessary demands appear on the short-term agenda for the second stage to one day arrive. Here appear the limitations on financing, bureaucratization and the elimination of distorting taxes.
As far as he could know Scope, The biggest concern that companies have is focused on the “Argentine cost”. They are concerned about high taxes, withholdings, logistical costs and some labor issues. At the meeting it was stated that “reducing tariffs is good, but if we do not manage to be more competitive it is very difficult to grow.” Here, issues related to infrastructure appear, where waterways and railways are topics that are on the agenda.
Marina Senestro, director of government affairs of the entity, stressed during the meeting that agriculture is decisive for the Argentine economy and therefore it is key to “promote financing, reduce the tax burden, establish regulations for the effective protection of the rights of intellectual property and promote infrastructure improvements, where connectivity plays a crucial role for the productive sector.” From these improvements, multiple businesses could be generated, for example in the agricultural machinery sector.
The “Conectar Agro” project
This initiative seeks to transform the reality of rural communities and even several main cities in the interior of the country. Without connectivity, it is impossible to “get the most out of” cutting-edge machinery: it is like having a high-end car to go to the supermarket and without fuel, so making that investment does not make much sense. Connectivity is the fuel, that is why the companies made an alliance with Telecom and will give internet access to more than 500,000 hectares in the towns of Rojas and Pergamino, in the province of Buenos Aires. Here not only will services be provided to agriculture but the entire regional community will benefit.
Agricultural machinery companies that have plants installed in the country, such as CNH Industrial, Agco and John Deere, are working on this project. In dialogue with Ámbito, Federico SilveiraCorporate Communication Manager at CNH Industrial, highlighted the work agenda that AmCham proposes to resolve these issues that slow down the renewal of the machinery park, which in our country has an average delay of 10 to 15 years, when in Brazil it is 6 to 8 and in the United States between 2 and 3 years.
In the same line, Juan Lozano, Manager of Institutional Relations of said company, highlighted to Ámbito that “the axes on which we want to work cross each of the companies, which are very diverse, to generate synergy and a continuous work table between the public and private sectors.” .
It is important to remember that sales in the agricultural machinery sector have been strongly affected in recent years due to the lack of constant credit and fundamentally due to the high cost of factories to finish a piece of equipment compared to other countries in the region. As an example, they detailed that the machinery sector has so far faced 57% taxes to produce, where the income tax, the PAIS tax and a series of perceptions that make the product more expensive and destroy competitiveness stand out.
Support for Milei policies
Alejandro DiazCEO of AmCham, highlighted that the regulatory schemes that governed during the last governments affected the normal development of the economy. In this sense, dozens of companies in different sectors – where agriculture and food also appear – were affected in terms of the profitability generated. Although there was a high utilization capacity of the industry, profits did not meet the expectations of businessmen.
According to Diaz, currently the situation is extremely complex in that there is a sharp drop in sales volumes, however there is full confidence that the removal of regulations in the economy is the correct path. In this sense, the recovery of the macro and micro – which they predict would take about three years – would also have a positive impact on the agricultural business.
The CEO of AmCham explained that based on economic stability and support for large investments, if the mining and oil business can take off, along with agriculture, Argentina should no longer worry about the dollar, because the trade surplus would be really important.
But for all this to happen, our country would have to get out of the trap. When consulted by Ámbito on this point, Díaz explained that with an export scenario like the one proposed in the future and a stabilized balance of payments, less dependence on exchange controls could be expected. Today there is a trend towards normality in terms of payments for imports, however the elimination of the financial stocks would be important since companies are limited to issuing royalties and that is an essential condition for new investments to arrive.
Source: Ambito
