Why the Government Chose to Lose $1 Billion in Beef Exports: The Story Behind Argentina’s Agro Dollar Scheme

The Government “preferred” to lose US$1 billion in beef exports rather than add this product to the agricultural dollar, which recognizes an exchange rate of $300, or to a foreign sales scheme that would have brought these currencies.

as he was able to reconstruct THE NATION From market and activity sources, there was a proposal from the private sector that consisted of “two months of beef exports” with a differentiated exchange rate or that the product be added to the agro dollar. The initiative was aimed at boosting the sector and generating the foreign exchange that the Government seeks for the reserves of the Banco Central (BCRA). However, fearing a potential effect on inflation, which last March climbed 7.7% and accumulated 104.3% year-on-year, the government gave up.

Actually, the proposal was that, by adding beef to the agricultural dollar scheme, around US$500 million would be reached in a single month; in two months it would become US$1 billion.

THE NATION He was able to find out that in the meat industry they had considered joining the scheme that the Government launched at the beginning of April with an exchange rate of $300. This proposal would have interested the Minister of Economy, Sergio Massa, who decided to refer the issue to his Secretary of Commerce, Matías Tombolini, to analyze the situation of beef at the national level and a possible impact on inflation.

Nevertheless, Tombolini’s response was “negative” and this would have been excused with the increase that this product has had in recent months.

According to the latest report of the Institute for the Promotion of Argentine Beef (Ipcva), beef prices last March rose 14.2%. However, meat lags behind inflation. While the Interannual Consumer Price Index reached 104.3%, the interannual variation of consumer meat was 86.5%, that is, 18 percentage points below inflation.

Sources consulted said that, after the proposal, there was a negative response and no room for negotiation on the part of Commerce. They even mentioned other sources that Tombolini would have mentioned that the meat market “He was to blame for inflation.”

Before a query of THE NATION, from that Commerce portfolio they said that there were no meetings on this issue, but there were on the seven cuts to Careful Prices, which will be in force until June 30 with a monthly increase of 3.2%.

In the first quarter of the year, according to IPCVA, 196,109 tons of bone-in beef were exported, representing US$649,373 million.

When the government formalized the farm dollar, considered, among other products, meat, although without specifying which would enter the scheme. In the first list they were considered “live animals, meat and edible offal, fish and crustaceans, molluscs and other aquatic invertebrates, milk and milk products; bird eggs; Natural honey; edible products of animal origin, not elsewhere specified or included; other products of animal origin not elsewhere specified or included, live plants and floriculture products, vegetables, plants, roots and tubers for food”.

On the other hand, weeks ago it became known that In the Ministry of Commerce, which established strict guidelines for internal price increases for those who export within the framework of this program, there were around 2,800 cuits eligible to enter. In addition, it transpired that in the Government they asked Tombolini “be more flexible in the entry of companies”, since strictly speaking only 25 had entered in the first two weeks of the measure. In 24 hours, 450 companies could be registered.