Thursday , January 28 2021

Owners of the dollars SPECIAL REPORT …



In terms of clarifying the capabilities of Argentina's economy, some analysts usually turn over and over again to two persistent tales. The first of them is that, and, the country will remain a "bread basket of the world"; while the second ensures – with almost religious faith – that, whatever happens and who manages who we govern, "with a good harvest, we all save ourselves ". This long-standing mythology in many sectors of society would explain why the agricultural question comes centrally in Argentina that it is lacking in other latitudes.

The current government began its mandate with a measure of measures that are consistent with this mythology. I was completely eliminating or partial suspensions on agricultural exports, deleting the restrictions that weighed the foreign currency derived from those and appointing leaders of the entities t Rural businessman at the head of the former Ministry of Agriculture, some of the steps initially promoted by President Macri and his team to give back to the field of the fight achieved against " t popularity ", on the one hand, and the specific support received during the election campaign, on the other hand.

The new relationship between the Government and the countryside became useful, but things happened. The official expectations of export boom never happened in these three years, the exchange and foreign exchange shortages and the urgency to balance the financial accounts forced the Government to cut its initial commitment and to apply, instead, a scheme of measures that the field considers, as always, unbearable. Therefore, by the Ministry of Finance and Finance, it was decided to cancel the gradual reduction in so-called exports and establish new taxes on the sector as a whole.

Significant

As with other recorders, the Argentine countryside does not exist except as a structure that uses political debate to encompass a variety of diverse actors and interests, often being express in a weak and disproportionate manner. Someone could define, perhaps, what the field is and who it represents best. Could, perhaps, be a rural tenant, the family company, subsistence agriculture, the latifundio, the sowing pond, the large grain operator or the multinational export; or all of them with each other? As has been said, the Argentine field creates a virtual game board with too many actors and interests.

Beyond how rural production works specifically, what is interesting for economic analysis is its ability to export goods and create foreign exchange. Let's put it like this: studying the field and its links with other actors in politics and the economy is trying to better understand how the "bread basket of the world" will be produce the dollars needed to "save everyone".

Exports

Last year, four out of 10 dollars exported in kind were produced by the agricultural sector. This is undoubtedly the most powerful sector of the external economy and the one that most affects the results of trade balances and payments, as well as more or less supply. local foreign currency.

Over 450 agri-export companies registered overseas sales during 2018; however, not all of them have the same force of economic impact and, even less, political. Only a few of them belong to the "agri-dollar club" option.

The club has been integrated by 30 companies, some international companies and others, but all of them are dedicated to very diverse businesses that exceed their agricultural nature. These companies meet two dual corporate bodies: the Argentine Chamber of the Oil Industry (Ciara) and the Cereal Export Center (CEC).

In parallel, a smaller part of the Ciara-CEC universe (a total of seven companies) consists of a third entity which, unlike the other two, represents the interests of companies committed to expressing agricultural and energy businesses. : The Chamber of Argentina of Biofuels (Carbio). Oleaginosa Moreno (along with Vicentín, owner of Renova, Argentina's chief biodiesel exporter), Aceitera General Deheza and Bunge Argentina (Terminal 6 managers), the international companies Cargill and Louis Dreyfus and the Chinese state company Cofco Internacional. , that the country operates in an alliance with the global Nidera and Noble.

During 2018, members of Ciara-CEC declared foreign sales worth nearly 22,000 million dollars, which represented 35 percent of the country's total exports, excluding biodiesel external sales, which amounted to 1,100 millions of additional dollars.

Power

The agri-dollar club is a powerful economic actor, but we have to add that a big part of its power lives in the mechanisms that I have written and knew how to be held with the main political players, including and influencing the various governments.

Having failed in its objectives of reducing inflation, recreating economic growth and creating employment, all the Government's efforts today are aimed at keeping the value of the dollar stable and avoiding a new exchange rate run, like the one that happened. last year. . This is the only planned economic plan that, if effective, will allow Mauricio Macri to face the presidential election with some chance of winning.

In the last few days, the economic cabinet has shown quietly because it believes it has sufficient resources to cover the dollar and thus avoid any threats that are worn. On the one hand, by 9600 million dollars from April the National Treasury can be used to intervene in the exchange market in homeopathic doses of 60 million every day and, on the other hand, is taken for granted. that the agro-dollar club will facilitate the liquidations of exports of coarse harvest (corn and soybean).

Harvest

To add to this quiet forecast, some economic analysts insist on setting huge expectations on the expected grain crop of the current agricultural campaign. In both cases, the tranquility and optimism circulating today in some reports, the media and official corridors seems excessive. Let's try to explain why.

In November 2017, when the relationship with the field was at its best, the Government decided to extend the 10-year period for the agri-export sector to abolish the foreign currency to its overseas sales. . He also decided to abolish the obligation to enter this country effectively. Ten years to liquidate without having to bring dollars to the country, so you don't have to be a keen economic observer to realize that having a good harvest does not automatically mean more foreign money from agriculture. Agro-dollars will be anywhere in the world except here, where they are most needed.

There is clear evidence to support the argument presented here: since the abolition of the above restrictions, the Agro-Dollar Club has been reducing its daily settlements in a sensitive manner. The monthly data published by Ciara shows that, over the last year, the companies that have integrated it have abolished 19,611 million dollars, an amount that was 8.4 per cent lower than 2017 t and, even, 1,7 per cent lower than the one registered in 2015, when Cristina Fernández de Kirchner finished her second term. So far in the Macri era, the maximum amount settled in 2016 was when the depreciation effects and tariff reductions were still an impetus for members of the club to release their money.

In June 2018, the government went to the major agricultural exporters to ask for patriotic posture which had not been repeated since. At that time, Club agreed the agro-dollars to the official application and settled that same month 3225 million dollars, an unprecedented amount that served forever to expand the supply of dollars. disaggregate the exchange pressures on the BCRA. A little less than a year since, the government almost certainly assumes, in the short term, that the club will once again divert its very valuable agriculture dollars.

Options

On the other hand, members of the club seem to have torn between two options. The first, of a financial nature, is to abolish the minimum foreign currency possible – so far this year it has been doing at a rate of less than 80 million dollars a day – and to bet that the exchange rate is t follow its trend on progress. Even the possibility of a stampede in the price of the dollar would undoubtedly favor them. This option sounds much more reasonable than the unfounded Government optimism because, in a nutshell, is based on the following question: why they should fund the dollars trip ultimately, if the one IMF has decided to limit the Government's use of your reserves for that purpose?

The second option has to be related to the last, but its nature is completely political. Members of the club are very aware of the fragility of the government. They also know that a new exchange rate is a very likely event, given the skills shortage shown last year by the Central Bank to cover the dollar.

The bottom line – for the club and for many other actors – is that, if there was a possibility of such a occurrence of the end, the government would end until October and that their reelectionist aspirations would disappear immediately. The dilemma of our front is to discern what would be best for them: making a new patriotic posture by injecting agro-dollars into the system to prevent the government from sinking to its own failure or, t To the contrary, going to his own short-term game and devoting himself to see insurmountable things happen simply, and what might happen in this case is their failure to produce a political past return they are so fierce with him: any entrepreneur would say that “there is no worse business climate than uncertainty.” t

Facing one or another option, and facing a complex political scenario that the powerful and optional dollars-steel club has not yet seen, but a choice between greed and panic

* Political scientist Treasury Writer and Nation (Eudeba).

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