Argentina considers limiting agricultural exports to curb inflation
RIO DE JANEIRO, BRAZIL – The Argentine government is expected to announce a package of measures tomorrow that President Alberto Fernández calls a “war on inflation” and that includes export restrictions on several products.
According to Argentine media, the restrictions will not affect corn, wheat and soybeans, but derivatives such as soybean oil and flour, for which the export tax (retenciones) will be raised from 31% to 33%.
If confirmed, the measures would have the effect of increasing tax revenues and expanding product supply in the domestic market, theoretically leading to a decline in prices.
The package is a government response to rising inflation. On Tuesday, the consumer price index (CPI) accelerated to 4.7% in February, the highest monthly rate since March 2021, driven by food.
These figures put further pressure on the Fernandez government, whose agreement with the International Monetary Fund (IMF) set an annual inflation target between 38% and 48% for 2022.
The agreement was approved by the Chamber of Deputies last week and is expected to go to the Senate for a vote today. The wing of the government associated with Vice President Cristina Kirchner voted against the bill in the plenum, and her supporters protested the agreement in the streets.
Amid speculation about Fernández’s package, a Twitter post yesterday by Agriculture, Livestock and Fisheries Minister Julián Domínguez hinted that export restrictions could extend to meat producers.
“I have just left a meeting with the ABC consortium [of cattle producers] and informed them that those who do not fulfill their obligations to Argentina will no longer be able to export meat,” the message reads.
“This is a blackmail of producers to force an artificial price reduction,” said an analyst who wished to remain anonymous. “And apart from anything else, it is an unintelligent blackmail, since meat exports are one of the only sectors capable of bringing foreign currency into the country today,” the source added.
“There are a lot of measures that the government needs to take to fulfill its commitments to the IMF, especially in terms of controlling inflation, reducing the budget deficit and slowing the exchange rate depreciation,” said economist Sergio Berenstein of the consulting firm berenstein.com.
“I would rather wait to confirm the speculation about this package, but whatever it is, it is unlikely that they will achieve anything with these apparent concessions to pure populism.
In statements he has made since the beginning of the week, Fernández said that Argentina was experiencing a “new economic phase” and would announce a new list of food products with controlled prices (under the Precios Cuidados program). This pricing could initially last 180 days, with the possibility of extending it until the end of the year.
The agreement to renegotiate $44.5 billion in debt with the IMF is being contested by the Kirchnerists because it is part of a $55 billion loan granted by the Fund to Mauricio Macri’s government.
However, the pact includes a commitment by Argentina to reduce its budget deficit to zero by 2024 and to reduce currency issuance to finance public spending.
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