Monday, March 27

David Miazzo: “Despite the drought this year, agriculture would contribute US$38 billion in exports”

David Miazo: Current estimates are that the drought would cut production by an estimated value of between US$5,000 and US$6,000 million and that translates into between US$3,000 and US$4,000 million less exports compared to 2021. Luckily international prices are helping, but the truth is that in Argentina agriculture represents 70% of the country’s exports, but if we look at the sectors of the economy that generate net dollars, agriculture represents 93% of the total. That is why the agricultural chains have a central role in generating dollars to have a positive trade balance, especially this year, or in fact, as the last three were, with a great need to generate dollars for the country. Above all because there is no confidence that dollars will arrive for investments and there is also a lot of distrust in the country’s ability to pay, so dollars do not arrive. However, the positive fact is that despite the drought this year, agriculture, as a whole, would contribute US$38 billion through exports, a value that is definitely better than 2020 and, of course, than the two previous years. What happens is that the drop in foreign exchange income is compared to 2021, which was a historical record year with high international prices and harvest volume. So the picture is not so bleak.

Q.: How viable is an economy that depends so heavily on a single sector that is also influenced by factors as unpredictable as the weather or the purchasing power of its importers?

D.V.: Of course, a greater diversification of exports and having more export sectors is something very positive and necessary to achieve not only a greater number of dollars but also greater development, since export activities always end up paying better wages, implementing more technology, among others. issues. So it brings many benefits and it is clear that we must try to do everything possible to achieve diversification and not depend 93% on agriculture. But much can also be done to increase agricultural exports, where the soybean chain is the main sector that contributes foreign exchange but also has the highest tax burden. Basically it has all the taxes that the entire economy has today and to that is added 33% for export duties. This leads us to ask ourselves what would become of these productions with a lower tax burden, with less uncertainty, as is the case with meat, corn or wheat, which have certain restrictions on exports.

Q.: One of the biggest demands of the field is the total elimination of export duties, but the truth is that today that does not seem to be feasible in this economic context. Something else that other governments could not implement either. What would be the way to achieve it does not depend on that box that is so important for the national coffers?

D.M.: If a reduction in public spending is not discussed, everything seems impossible. If public spending is not lowered, one cannot think of the country getting out of debt at any time, nor of stopping issuing to cover the deficit, something that generates inflation, and if spending is not lowered, one cannot think of lowering the pressure either. tax to the countryside or to any other sector of the economy. Beyond that, it is clear that all export duties cannot be removed from one day to the next and that it would have to be a gradual process. To the extent that they are reduced, this will generate an impact on production that, in practice, would increase collection and the generation of dollars. In addition, setting goals for a gradual reduction can generate expectations for the investment decision. In this gradual process, one could start with the regional economies that represent a very small portion of the collection, then continue with meats and cereals that represent a small portion against soybeans and finally soybeans with a longer-term horizon. Something important to note is that rights to agricultural exports do not have countries such as Uruguay, Paraguay, Brazil, the United States, Australia, New Zealand, Russia or Ukraine, all countries that have important agricultural production. So if they may not have export rights, why would it be impossible in Argentina?