06/21/2024 – 12:35
In the thriving agricultural region of Buenos Aires, silos overflow at the end of the harvest. Producers postpone sales in the hope that ultra-liberal President Javier Milei, to whom they gave their vote, will eliminate taxes and exchange restrictions.
“The silos are full, only enough is sold to cover costs. Those who can, wait,” Ricardo Semino, a farmer from Lobos, 110 km southwest of Buenos Aires, in the rich humid pampa dedicated to harvesting corn and planting wheat, told AFP.
The latest estimate from the Rosario Stock Exchange predicts that the grain harvest will reach 131.1 million tons, compared to 82.2 million in the previous harvest, drastically affected by a historic drought.
However, due to low international prices and the exchange rate lag, farmers are postponing the sale of their production, which makes it difficult for the president to see the fruits of the first harvest under his government.
Argentina, known as the breadbasket of the world, is the third largest producer of soybeans, behind the United States and Brazil.
The country exports 70% of its agro-industrial production, which in 2023 represented 55% of Argentine exports, generating important tax revenue for the State.
This year, it is estimated that exports will reach 29.3 billion dollars (R$ 159 billion), below the average of 32 billion (R$ 173.6 billion) over the last five years.
“Although the volume of production increased by 60% compared to the previous year, the value of agricultural exports increased by less than 23%,” explained the Rosario Stock Exchange.
– Speculation –
Tons of soybeans and cereals accumulate in the open air in ‘silobags’, a system for storing grains and fodder wrapped in plastic.
“They speculate when they send the grains to the silo plant. Nowadays, silos are large and offer the possibility of delivering the cereal and selling it in five, six, seven months or even a year”, explained Semino.
A report by the Rosario Stock Exchange estimated that there are around 35.6 million tons of unsold grains, worth almost 10.6 billion dollars (R$57.5 billion), vital for a government that needs to reinforce reserves monetary.
The Buenos Aires Cereals Exchange reported that in May, although the pace improved compared to April, there were almost 38% fewer exports compared to the same month in 2023.
The agricultural sector supported Milei in the 2023 presidential elections, trusting in a speech that promised a “retention-free field”, referring to the tax whose repeal has been requested for years.
However, shortly after taking office, the new president increased rates from 31% to 33% for exports of soybean flour and oil.
He also promised to eliminate regulations on the foreign exchange market, the source of distortions due to multiple exchange rates and an informal market that influences domestic prices. Inflation, although falling, was 280% per year in May.
Costs for the agricultural sector have increased significantly, producers say. Last year, “a tractor that cost $170,000 now costs $250,000,” Semino said.
After six months in government, Milei did not make progress with his promises to the countryside and, on the contrary, increased several taxes, including those on fuel.
Inputs are increasing in price according to the informal dollar (around 1,300 pesos), while grains are exported at a special rate for the countryside, slightly above the official exchange rate, around 945 pesos.
“All of this complicates things a lot, the ideal would be to have a unified dollar,” said Semino.
Despite the recession, support for the government prevails. “This government devalued in December (52%), which benefited us. Now expectations are good, we are hoping that there will be a single type of exchange rate”, said the farmer.
Both the president and his Economy Minister, Luis Caputo, ruled out a new devaluation and refused to set deadlines for the normalization of the exchange market.
– “The field doesn’t stop” –
Economic uncertainty does not prevent the field from making new projections.
The rains boosted wheat planting, which promises a 40% increase in the next harvest, “around 20 million tons”, Cristian Russo, head of estimates at the Rosario Stock Exchange, told AFP.
The agricultural sector “doesn’t stop”, even when policies don’t cooperate, explained Semino.
“We are used to moving forward, no one is going to abandon a lot because they are waiting for another government; we have to plant and make the most of it,” he concluded.
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