Ten arguments to show that retentions are not appropriate for the country – 19/07/2018

Although President Macri has already confirmed on several occasions that the government will not reimpose export duties on wheat, corn and sunflower, nor that it halts the gradual reduction in retentions of soya, some sectors continue to insist on the need to take them back to compensate for the fiscal deficit

An economic and productive study of the Rosario Stock Exchange, prepared by Julio Calzada and Blas Rozadilla, summarizes in ten points the main arguments to demonstrate [19459005thatArgentinadoesnotwanttoreturntoexportrights which has eroded the competitiveness of agricultural chains for more than ten years.

1) Contribute to producers who are recovering from drought. The losses caused by the drought have ruined much of the expected economic growth for this year, which has worsened after the financial turmoil of recent months. The resumption of agricultural production in the 2018/2019 campaign is essential to resume the path of growth needed to meet the commitments made and to manage the public accounts.

Producers, in addition, are struggling to finance the new campaign because of reduced income by the drought, high bank and non-bank interest rates, in pesos, the complications that currency volatility has caused in the payments chain, especially in the interior of the country; and higher cost forecasts for agricultural inputs and operating costs, many of which are polarized.

2) Export duties generate less seeded area, lower production and less economic activity. The expected decline in income from the application of withholdings causes a decline in producer consumption, less production, less exports and a decline in foreign exchange earnings in a real way for l & 39; national economy. They will also spend less for supply, labor, harvesting, insurance, freight, marketing expenses, expenses by structure and administration.

3) The agricultural sector is the only one able to generate 25 000 million dollars per external year. In 2017, every ten dollars entered the country because of exports, four came from cereals, flour and oils. The soy complex is the most important in the trade balance of our country. Soy flour / pellet is the main export product, soybean oil in third position in 2017, beans in fifth position and biodiesel in ninth. Cereals are also distinguished in this area, mainly after the removal of export duties that led to production.

4) The income from soybeans allows many producers to finance other important activities such as the production of meat and milk . Argentina, in beef, produces 5% of the world total and exports 2%. In dairy products, it is the world's fourth largest producer of whole milk powder, the ninth largest cheese producer and the 16th largest producer of raw milk. Many countrymen diversify their activities between agriculture (cereals), livestock and dairy products. The continuity of the holdbacks will result in lower income and, indirectly, these productive activities will be affected, especially in geographical areas far from the production centers.

5) The lower volumes produced generate less activity in trucking and fell the carriers' income. Declining agricultural production will reduce trucking movements. This will generate lower revenues for carriers. Normally, the total cost of the chain of granaries for the transportation of goods by truck fluctuates annually in the $ 4,000 million, an amount that would decrease significantly.

6) The decline in transport activities implies a lower consumption of charges. The decline in soybean and corn production will lead to a decline in diesel fuel consumption by truck transportation. Argentina's agricultural sector consumes 3,800 million liters of diesel annually, generating an expenditure of $ 4,300 million, which is reintroduced into the economy for circulation. The agricultural sector is responsible for 22% of total diesel consumption.

7) The decline in producers' net margins will imply a decline in sales of agricultural machinery, equipment and wheels. The reduction in sales of agricultural machinery will be a blow for the 850 companies in the sector, the 290 agro-industrial enterprises and 17 precision agricultural enterprises, which have already been severely punished by drought. In the province of Santa Fe, 47% of companies are in Cordoba 30% and in the province of Buenos Aires 20%. It is estimated that they generate 40,000 direct jobs – mainly skilled labor – and about 50,000 indirect jobs.

8) The decline in agricultural activity has a direct impact on employment. In 2015, agri-food sectors and sectors generated 2.7 million jobs, agribusiness being the link that generates the greatest number of jobs and specializations in terms of human resources. About 70% of the total employment generated by the agricultural and agri-food sectors corresponds to agro-industry: about 2 million people. This represents about 11% of the active population of Argentina (nearly 18 million people). If the sector sees its income affected, there will be a direct and indirect impact on employment.

9) Lower soybean production due to retentions will cause less activity in the oleaginous industrial complex. This weaker activity of Argentine oil factories will have an internal impact in various fields, both in the industry and in the port terminals: the sales of input suppliers will decrease, the consumption of electricity and other services will decrease, there will be less recruitment of new permanent or transitional employees, new additional investments will not be executed in some factories or ports, etc.

10) From a lower production – by deductions – exported volumes will be reduced which will result in a decrease in fobbing expenses and dockers. All those providing services to factories and port terminals will be affected by lower physical volumes sent abroad.