The water shortage has devastated Argentine agricultural production, wiping out major crops, both in terms of quality and quantity. The losses to farmers will be huge, but even so the state continues to take its share of the harvest agricultural export rights (withholdings) and grain trusts.
To put the situation in figures, the Lonja Group, made up of rural producers such as the former Minister of Agro-industry, Luis Miguel Etchevehere; the former head of cabinet of that portfolio, Santiago el Solar and the national deputy of the PRO, Pablo Torello, based on the data of the economists of the consultancy firm Gobaltecnos, analyzed the costs and revenues based on the estimated yields for the three most important crops of the core area, the most productive, which mainly covers the north of Buenos Aires and the south of Santa Fe, and minus the rent that remains in the hands of the government.
According to analysts, in the case of wheat, considering a yield of 20 quintals per hectare -a number that in many plots was not even close to reaching last season- and costs of USD 855 (direct costs plus a rent of 18 quintals of soybeans per hectare for that area), the producer would have a loss of USD 151 per hectare . But, since the national State removes 12% of withholding taxes and 1% of the grain fund on the sale of the product, which is equivalent to USD 104 per harvested hectareFinally the producer ends up losing USD 255 per hectare.
In corn, reaching a production of 55 quintals and costs of 1469 USD per hectare, a global profit of 131 USD per hectare would be obtained. However, how the government takes 214 USD (12% withholding) the farmer would lose USD 83.
While, a soy that yields 15 quintals per hectarewith a total cost of 1081 USD, it would leave a global loss of 233 USD per hectare, the Nation State would collect USD 285 (33% withholdings plus 1% trust) and so on the producer would lose USD 518.
“The producer is bankrupt because the crops areon very low due to drought and it doesn’t cover the expenses, but the Government tells you: I don’t care, I’ll take the money anyway, because it takes away from the sale, not from the earnings, therefore the loss you had increases because you also have to pay withholding taxes to the State”, he explained Del Solar.
“In this context, there would still be the possibility that in some cases, such as corn, there would be producer-level profits, but export duties, being a sales tax, turn possible profit into loss”, indicated the Lonja Group.
To this analysis must be added the currency gap which serves as a secret outlet. since when it comes to dollars, agricultural producers receive the official value of the currency for their goods while “contained and hard dollars enter the state”, noted by the Lonja Group.
He also warned that “without the possibility of positive outcomes for the manufacturer, the payment chain will be severely affected and its continuity.
“The most important thing is that the manufacturer is losing working capitalDel Solar noted.
Furthermore, in this campaign, due to the strong deterioration of the grains obtained, the producers will suffer considerable marketing discounts, which will further aggravate the critical situation in which drought-affected populations find themselves in a large part of the country.
Source: Clarin
