The Argentine agricultural sector is confident that new presidential policies will boost the industry

O setor agrícola argentino está confiante de que as novas políticas presidenciais impulsionarão a indústria
Image: Pixabay

Key players in Argentina's agricultural sector believe that Javier Milei's victory in the country's November 19 presidential election will result in reforms that will boost agricultural production and exports, as indicated in an AgriCensus report.

Milei committed to making radical changes to encourage the country's growth, which is facing several difficulties, including triple-digit inflation, as mentioned in the November 20 report.

Priorities include closing the central bank, dollarization, spending cuts, privatization and withdrawal from Mercosur – the Common Market of South America, as detailed in the report.

In an interview with a local radio station on November 20, the day after the election, Milei reportedly stated that he planned to implement these priority policy changes upon taking office on December 10.

Although Argentina is one of the world's largest exporters of beef, corn, soybeans and wheat, the country's grain and livestock producers have called for tax cuts and an end to limits that they say are hurting exports, as reported in a Nov. 20 Reuters report.

Milei's election in Argentina promises radical changes in the grain sector

Milei's election paved the way for a “radical change” in agricultural policy. The country's main rural associations, cited by Reuters, see this choice as a significant opportunity.

“We have opened a great opportunity to collaborate and implement radical changes to current policies,” the Argentine Rural Society (SRA) said in a statement.

When congratulating the elected president, the main Argentine agricultural associations, CONINAGRO, stated in a statement that “we are at the beginning of a new stage”.

The Argentine Rural Confederations (CRA) urged Milei to work with the agricultural sector and requested tax deregulation, as mentioned in the report.

Milei's election could boost spending by local farmers. This, according to Federico Trucco, CEO of Bioceres, could increase grain prices. Trucco mentioned in a Reuters report on November 21 that if Milei implements a single exchange rate and eliminates taxation on exports (equivalent to a third of the international price), Argentine farmers could see grain prices double in dollar terms. real.

Peso devaluation expected as boost for production and sales

The majority of Argentine agribusiness traders, consulted by the Fastmarkets agency, expect the devaluation of the dollar to be the first positive change in the agricultural sector. “This should help with production and boost farmers’ sales,” said Pablo Santamaria, broker at Agrosud, to AgriCensus.

The Argentine peso was in decline, and low foreign exchange reserves led the government to introduce multiple exchange rates and capital controls. These measures were problematic for exporters, according to the report.

At the time of the report, the official dollar exchange rate was 668 pesos/US$.

“If this devaluation occurs, producers could triple their earnings. This will impact sales of wheat and barley, which are practically frozen. It will also affect sales of soybeans and corn, if there is enough product”, according to analyst Javier Preciado Patiño to AgriCensus.

However, fluctuations in the dollar can make products more expensive for consumers. This, in turn, will contribute to rising inflation. At the time of the report, inflation was already at an annual rate of 140%.

“It will be difficult at first, but I believe growth will stabilize over time,” Patiño added.

Political obstacles and perspectives for agribusiness under Milei’s administration

Analysts and brokers stated that Milei would probably not implement all the proposed changes. His party, the Freedom Alliance, held just seven of the 72 seats in the Senate and 38 of the 257 seats in the Chamber of Deputies.

“I don’t know to what extent the lack of support from members of Congress would harm their agenda,” Victor Martins, risk manager for Latin America at Amius, told AgriCensus.

Argentine analysts suggest that, despite reports about the exit from Mercosur and the change of alignment towards the US, trade relations are unlikely to change in the short term.

“In principle, the end of Mercosur (or Argentina's departure from the economic group) could harm Argentine agribusiness by taking away preferential access to the Brazilian market, which is huge. However, after the initial impact, everyone would win”, said Agrural analyst Daniele Siqueira.

Siqueira states that a government aligned with the free market, as expected under Milei's administration, can make Argentine agribusiness more competitive. This would be through the removal or reduction of export taxes, reduced control over export volumes and other economic measures.

Source: Oils & Fats International

Facebook
twitter
LinkedIn

Aboissa supports

Stay up to date with news
and the best opportunities in
agribusiness – sign up now!

Asia

Saudi Arabia

Bangladesh

China

singapore

South Korea

United Arab Emirates

Philippines

India

Indonesia

Iraq

Jordan

Lebanon

Malaysia

Oman

qatar

Türkiye

Vietnam

Hong Kong

America

Argentina

Bolivia

Brazil

Canada

Chile

Colombia

Ecuador

U.S

Guatemala

british virgin islands

Mexico

Nicaragua

Panama

Paraguay

Peru

Uruguay

Suriname

Venezuela

Dominican Republic

Costa Rica

Cuba

Africa

South Africa

Algeria

Cameroon

Costa do Marfim

Egypt

Liberia

Morocco

Sierra Leone

Sudan

Kenya

Tunisia

Mauricio Islands

Europe

Albania

Germany

Belgium

Bulgaria

Spain

Finland

France

England

Italy

Lithuania

Poland

Portugal

Russia

Türkiye

Serbia

Sweden

Switzerland

Ukraine

Cyprus

Estonia

Ireland

Romania

Oceania

Australia

New Zealand

Request a quote!

Fill out the form and get support for your business needs.
Our experts are ready to offer customized solutions.

*We are currently not working with intermediaries.

By providing my data, I agree with the Privacy Policy.