This year, Brazil surpassed USA regarding the production of grainbecame the world’s leading exporter of corn, and is very close to doing the same in the global cotton marketaccording to statistics provided by the Agriculture department US.
Several reasons explain the loss of US leadership in the export of agricultural commodities. First of all, the strengthening of the dollar, which made foreign purchases more expensive. Furthermore, the Government prioritized the use of corn for the production of ethanol, which led to excess grain storage. Other factors include rising domestic prices, particularly in transportation, and droughts in key growing areas, such as the mississippi river.
The truth is that, in contrast to this loss of leadership, Brazil strengthens and, in the current harvest season, reached 32% of total global corn exportswhile the US was left with 23%.
Projections by US authorities suggest that this trend will remain for next year. And the power of Brazil is such that, according to calculations of Ariel Tejararesponsible for the Brokerage’s Analysis Department Grassi SAfor the next campaign of the Latin American giant, the first projections point to volumes of “up to 129 million tons of corn and 160 million tons of soybeans”.
Grain market: projections for Argentina
“If current projections materialize, Brazil would harvest about 10% of the corn and 40% of the soybeans of the world,” warns Tejara in statements to Ambit. But how does this impact the Argentina?
According to the analysts consulted by this medium, in principle, the impact would not be very positive, given that a greater preponderance in that place by Brazil threatens to dilute participation and positioning of Argentina in it world grain market.
However, it could be thought that the entry of our country into the Brics for 2024group that integrates Brazil, Russia, India, China and South Africarepresents an opportunity to join the momentum of the neighboring country and capitalize on it.
BRICS: a window for Argentine agriculture?
Let us remember that, at the last summit of the bloc emerging economies, which was carried out in South Africa recently, the entry of our country into the group was approved, promoted by China and BrazilArgentina’s largest trading partners, mainly.
Among other things, the Brics countries seek the dedollarization of transactions among the members. That, added to the role assumed by Brazil in the market of commodities It can be a great opportunity and the question that arises is, what benefits would I receive? the national agriculture from that integration.
For Guido D’Angeloeconomist at the Rosario Stock Exchange (BCR), a first element that must be highlighted is that the potential incorporation of Argentina to this bloc “does not in itself guarantee the facilitation of bilateral trade or multilateral.”
This because China It is already a key customer of Argentine meats and soybeans, India It is the main destination of national soybean oil and towards Brazil a considerable portion of the wheat we export goes, with which Argentina already inserts a considerable volume of products to several countries in this block. However, he acknowledges that “participating in more forums like this can be redundant in more linkages and potentially more trade in agro-industrial products.
Likewise, the BCR expert adds that another beneficial aspect would be “diplomatic ties“, since good diplomacy collaborates in solving problems in tariff and non-tariff barriers and administrative proceduresbut insists that “being on the block is not in itself a guarantee of more exports, although it can be an opportunity.”
About this aspectMarcelo Elizondoa specialist in international business, maintains that Argentina’s entry into the BRICS It would have no positive or negative impact. in the sector agricultural Argentinian. Explain that this is because the block It is not a commercial agreement, free trade, economic complementarity, market integration or tariff reduction..
“Rather, the BRICS are an informal agreement between countries so that governments share opinions and, sometimes, make common political decisions,” he clarifies.
Thus, for Elizondo, entry to the BRICS does not constitute an opportunity in itself to access markets with convergent trade regulations, a significant cost reduction or a great commercial opening, since high tariffs in the Indiaentrance fees in China and the costs of product adaptation (a process by which a good is better accepted in another market) will remain the same.
Therefore, according to his view, there is no direct relationship between the BRICS membership and the commercial advantages with these countries.
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