Argentina: Election Year, Soybean Dollar, and Adoption of the Yuan

“Given the drop in Argentina’s international reserves, the yuan appears as an alternative for trade with China…”

Hernán Emilio Satorre is co-founder of Amplificagro and president of the Association of Professional Facilitators of Argentina, graduated in economic sciences from the University of Buenos Aires.

Hernán Emilio Satorre is co-founder of Amplificagro

AgriBrasilis – Why did Argentina start to import so much soybean from Brazil?

Hernán Satorre – Mainly because the manufacturing industry does not have enough raw materials to fully utilize its installed capacity and meet its production objectives.

The causes of this shortage were due to bad weather conditions (drought) and the lack of public policies.

AgriBrasilis – What is expected from the new soybean dollar?

Hernán Satorre – The last “soybean dollar” established that 75% of currencies should be settled on the Mercado Livre de Câmbio (MLC), while the remaining 25% would be available free of charge.

It is important to understand that this measure does not generate resources, it only advances them (sales advance). This measure creates distortions in the agricultural value chain, especially in activities that use soy as an input or reference.

AgriBrasilis – How did the different exchange rates previously adopted behave?

Hernán Satorre – The first program, “Soybean Dollar 1” was the leader in tonnes sold, reaching almost US$ 8 billion. Its successor, the “Soybean Dollar 2”, recorded a lower sales volume due to its temporary nature and the fact that the majority of farmers, especially small ones, had already opted for the “Soybean Dollar 1” to obtain more competitive prices and meet financial commitments.

In a context of unfavorable agrometeorological and productive conditions, the “Soybean Dollar 3” managed to sell approximately 8 million tonnes, generating revenues of US$ 5.6 billion. These initiatives also impact purchasing strategies in the industrial and export sectors. Currently, almost 8 million tons of soybeans are awaiting commercialization, of which 3.8 million are awaiting pricing.

AgriBrasilis – How is it possible to increase soybean exports in a scenario of poor harvests?

Hernán Satorre – Argentina is in the middle of an election year. Therefore, many of the measures that are being adopted do not respect an economic or productive logic, but follow a political logic. The current government seeks to reinforce the Central Bank’s reserves looking at the short term, without considering the distortions and damages that may be generated.

AgriBrasilis – Why did China lose its position as Argentina’s main source of imports?

Hernán Satorre – The main reason has to do with China’s official plans focused on increasing domestic soybean production and reducing dependence on imports, which is part of a broader national food security campaign. Of course, this is an alarm signal for countries like Brazil and Argentina.

AgriBrasilis – What is the solution to avoid shortages of agricultural inputs due to import difficulties?

Hernán Satorre – The measures adopted by the Government negatively impact production, further limiting access to inputs. In the case of companies that have the capacity to do so, what they do is “stock” these inputs to guarantee availability in the event of a possible shortage. The problem is that this helps accelerate shortages. In the case of companies that have no other option, they end up replanning their production or reducing the technological package, which impacts total production.

AgriBrasilis – How can the use of the yuan contribute to Argentina’s investments and trade balance?

Hernán Satorre – Given the drop in Argentina’s international reserves, the yuan appears as an alternative for trade with China in a scenario where financing for the Argentine government is limited. However, this option appears as an alternative more as a matter of necessity, and not so much because of its benefits, since for the market there is still no currency with more credibility, security, and institutionalization than the US dollar.



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