“Unfortunately, politics in Argentina takes a very short-term view. Faced with failures in public policies, what government officials do is ask for help from exporters in the agricultural sector…”
Gustavo Idigoras is president of the Oil Industry Chamber of the Argentine Republic – Ciara and of the Cereal Exporters Center – CEC.
Idigoras is a political scientist from the University of Belgrano, MSc in international relations from the Latin American Faculty of Social Sciences and in business administration from the Free University of Brussels.
AgriBrasilis – What is Ciara’s role and the profile of the associated companies?
Gustavo Idigoras – CIARA and CEC are two associated chambers that represent 100% of exporters of corn, wheat, soybean, sunflower, soybean bran and oil, as well as sunflower bran and oil. In total, CIARA and CEC represent 55% of total annual Argentine exports across all sectors.
AgriBrasilis – You said that agribusiness should not be seen as a “dollar factory” and that the sector is at risk in Argentina. Why? How do you define the government’s actions?
Gustavo Idigoras – Agribusiness is much more than a dollar factory. It is a food production and job generation factory, representing 18% of formal jobs in Argentina. It is also a dollar factory as it is the main export sector in the country.
Unfortunately, politics in Argentina takes a very short-term view. Faced with failures in public policies, what government officials do is ask for help from exporters in the agricultural sector, to avoid major problems in the economy because of the foreign exchange shortage.
This is a path that no longer makes sense in our country and must be emphatically rejected. Argentina needs to have many factories geared towards production, employment and exports, and not just in the agricultural sector. For this, it is essential to stabilize the macroeconomy and have a single and competitive exchange rate.
AgriBrasilis – Could you comment on the lack of dollars for the acquisition of agrochemicals?
Gustavo Idigoras – Argentina imports inputs, mainly fertilizers, importing approximately 50% of its needs. The country also imports pesticides, in the form of active principles, that are not manufactured in Argentina for sale.
In recent times, because of the dollar shortage of the Central Bank of Argentina, imports have become very restricted and this creates a very big inconvenience. This generates unpredictability about when the merchandise will arrive, about the price at which it can be distributed and about when the importation will finally be authorized. All this is a limiting condition for the growth of agricultural production in the country.
AgriBrasilis – Why do you think the agricultural sector has stagnated in the last 15 years? What measures should be taken to reverse this process?
Gustavo Idigoras – Over the last 15 years, the agricultural sector has stagnated, especially with regards to soybean. Argentina produces the same as it did 15 years ago, only now suffering the consequences of the drought. Meanwhile, production in Brazil grew by almost 100%, and that in the US by 35%.
The stagnation has to do precisely with the lack of a State policy, in addition to a harmful view of some politicians, who severely punish soybean for being the main export product and the main means of collecting taxes through retenciones.
When the Government tries to “capture” these dollars, export tariffs rise much more than in other sectors. Today, soybean pays an export tariff of 35%, much higher than corn, that pays 12%, for example.
Export taxes are highly distorting and must be eliminated, especially in the case of soybeans, as this would create a much stronger and growing value chain with high international demand. It would also improve the country’s tax and foreign exchange revenue within a year because of the payment of domestic taxes.
AgriBrasilis – What has been the impact of special exchange rates (soybean dollar and agricultural dollar)?
Gustavo Idigoras – Special exchange rates appeared in September 2022 with the so-called Soybean Dollar I, a higher exchange rate than the normal one. Afterwards, a second edition was created in December 2022 and now, between April and May 2023, a third edition was established.
These are special exchange rates that the government sets at intermediate values between the financial dollar and the official exchange rate. What happens is that when there are volatile exchange markets, with much higher financial exchange rates, farmers stop selling. Therefore, supply is significantly reduced and this conditions the ability of the export industry to buy to industrialize and export. Thus, these third editions of the Agricultural Dollar and Soybean Dollar are not having the expected results.
These special exchange rates exist for short periods, usually for 30 days. The government does this out of necessity and urgency, to generate foreign exchange. It is not a request from the export sector. What we are asking for is a single, competitive exchange rate with no export fees.
The government, faced with the impossibility of practicing another economic policy, establishes short-term conjunctural policies, that can benefit farmers by receiving a better price.
AgriBrasilis – The idle capacity of the milling industry reached 70% in March. What are the consequences? What is expected in the short and medium term?
Gustavo Idigoras – The Argentine milling industry has a total installed capacity to process 73 million tonnes. Annual production never exceeds 50 or 55 million tonnes.
Based on the estimates of certain national bodies, today Argentina should be producing 85 million tonnes. Therefore, the industry prepared itself for this growth, but unfortunately the economic policy failed the attempts of growth and development of our country.
The recent severe drought caused Argentina to lose 28 million tonnes of soybean, and thus idle capacity will always be at levels above 70%. This implies huge losses for this industry and very large costs, that will lead to long-term technical stoppages anticipated this year.