We are all concerned about what is coming. The problem is not drought, because under normal conditions it would simply be a bad drink. Cancel and new account.
The problem is that the drought, the effects of which are already spreading through the economy and society, is gripping the agro-industrial sector without respite. Everyone already knows, but It never hurts to repeat: Since the retentions were reintroduced, the field has experienced an obscene and growing levy. For export rights alone, he transferred more than 120 billion dollars.
To that we need to add the exchange rate division, a long-standing experiment, which is intensifying these days. The gap is 100%, which implies this for every dollar that comes in, the government keeps half. In the case of soybeans, with a 33% withholding, the final bill is that of a dollar worth 400 pesos, the producer takes 200 and 33% must be subtracted from this. Another $70.
Now there is talk of a “soybean dollar 3”, officially the “agricultural dollar”. It would consist (because it is not confirmed at all) that instead of giving him 200 pesos for every dollar of 400, they would give him 300. It is a “improvement” 50% For a month the Government “resigns” half of the work of the gap. The goal is totally short-term. He aims for producers to soon liquidate their meager soy holdings, which are not only in short supply but also of poor quality.
The drama would be complete were it not for the fact that we have a powerful and very modern industrial structure, capable of processing grains that would be discarded anywhere in the world. Indeed, exporters without crushing facilities have withdrawn from the market. In a meeting held by industry executives with industry bodies, the intention to make the quality standard more flexible was raised.
The short term cannot be summed up in an attempt to promote the “peasant seller”, i.e. the sale of producers. Now There is a threat that the evolution of the exchange rate will be used to accentuate the worst effect of withholding taxes: the alteration of the input/output ratio. This is the technology equation. We see.
Withholdings of 33%, with a single exchange rate, imply that 50% more product is required to acquire a unit of technology. For example, fertilizers. Without export duties, one kilogram of soybeans would have to be delivered for one unit of phosphorus or potassium, the two elements that must be replaced to ensure production flow. At 33% withholding, that unit of phosphorus or potassium would cost 50% more in terms of soybeans.
But now we must add the threat of multiple exchange rates. In this idea of 3 soybean dollar, which would be about 300 pesos, the most likely scenario is that the K government also applies it to importing inputs. It would not have much impact on soybeans, which use little fertilizer. But it would have a complete impact on cereals (corn, wheat and barley), very demanding in nitrogen fertilizers. Half of them are imported and the price of those produced in the country is set on the basis of the international price, multiplied by the effective exchange rate. The Government has already begun to do so, when the Customs Agency-Afip eliminated the benefit of deferring VAT and profits to importers.
This implies a further increase in the cost of fertilizers, at a time when more they are needed to go for a much needed harvest. In addition, the central bank is discounting the dollars required to import these and other critical inputs. The government probably isn’t interested., in the “intelligence” that the next harvest will not be for them. Less quantity and less quality. Let the next one be solved.
Therefore, the most likely scenario is that what happened when similar conditions occurred repeats itself. Producers will move massively towards sowing that which has lower economic and financial requirements. Read, poor little soybean, so reviled in the K era, that I should be eternally grateful for the tremendous services rendered.
Soy is the escape route, not just because it requires little nitrogen due to its ability to capture it from the air. One day self-proclaimed environmentalists will understand the wonderful job done by nitrogen-fixing bacteria.. Argentina leads the world supply of rhizobium-based inoculants that do this job in symbiosis with legumes.
But in addition to this ability, soy is an autogamous species (it fertilizes itself). This allows any producer to use part of his crop as seed. This year will be more complicated, due to quality problems, which will be a matter to be resolved. But be that as it may, soy is much cheaper than cornthe crop it competes with, although it is also integrated into a rotation scheme.
This year in which rotation is compromised, we are faced with a new soybean wobble. It’s not for tearing off your clothes. It is an inevitable escape, and with the efficient and sustainable production system, the damage is minimized. And sooner or later the alternation of crops will be restored.
“WELL, what is your proposal, engineer?“My proposal is simple: Eliminate withholdings and unify the dollar. The field is undercapitalized and a part of everything he put into it must now be returned. It is an indispensable bridge if we want to speed up the recovery.
I know: the IMF won’t let us. They have been imposed on successive governments since 2002. Nobody had the imagination to propose other solutions, and there they stayed. AND here are the results.
Let’s try something else.
Source: Clarin
