Argentina is a world leader in agri-food production and exports, but in recent years it seems to have stagnated, while other major competitors have continued to grow. According to a study titled “Towards a more competitive, inclusive and resilient agri-food sector”, recently presented in the country by the World Bank, in the last 10 years, the health of the sector has weakened: In fact, Argentina is the only leading country in the segment, whose exports are decreasing.
Specifically, in the last decade agri-food exports have fallen by 1.3% annually, and Argentina’s participation in international agri-food markets decreased from 2.7% in 2011 to 2.2% in 2021. The support provided to producers in the country is lower compared to that of its international competitors: around 20% of gross agricultural income between 2019-2021.
For the organization’s leaders, only the predictability and continuity of policies will allow the sector to play a greater role in the country’s economic recovery, generating jobs, income, food security and resilience, and benefiting all citizens and the environment. .
“There are general and specific policies that are distorting and generate changes in the situation. At the tax level, the tax burden on exports, taxes on gross income and work to export and import stand out, which generate distortions in the sector that discourage investment and returns. Although the sector continues to generate, competitive disadvantages are creating obstacles,” he commented. Natalia WasilevskySenior Agricultural Economist at the World Bank.
According to the study, distortive policies have especially harmed small producers in more remote areas, with lower profit margins and less access to services. With taxes on Argentina’s livestock sector ranging between 49% and 57%, the profits of (mainly small-scale) beef producers have been hit hard, reducing their investment capacity and incentives to improve production practices.
Between 2001 and 2014, Argentina also lost more than 12% of its forest area, and producers and the public sector have not invested enough in water resource management. “If adaptation measures are not implemented, damage caused by floods could reduce GDP by 0.5% per year by 2060, and persistent droughts could cause a decline in GDP by 4% per year by 2050,” they said. from the World Bank.
According to World Bank spokespersons, Argentina can get out of this scenario by applying a new development approach based on three major fronts: “agri-food competitiveness and economic returns,” “socioeconomic inclusion” and “Environmental resilience and sustainability.” .
Natalia Wasilevsky, assured that one of the paths that must be taken to meet these objectives is the improvement of financing sources. “The largest companies in the sector, the transnationals, can access credit that is not available to the smallest producers. They can issue bonds and access capital markets. An improvement in this sense is expected as a result of the economic improvement and the reduction in country risk,” he commented.
“The biggest problem is with the little ones. There are companies that have more local access, which find it difficult to access credit due to the limited capacity to generate guarantee tools. That is why at the World Bank we emphasize the need to develop risk management coverage systems, such as insurance and guarantee funds. It is a problem that affects everyone, from companies to the provincial and national public sector,” added the specialist.
“Then there are medium-sized producers, who have the possibility of accessing financing through special government programs and development organizations, but there is a lack of dissemination of the tools.
Another drawback, beyond the lack of information, is that there is no critical mass of demand for insurance against climate catastrophes, which makes premiums extremely expensive. “Added to this is the fact that there is a lack of climate information, which makes the development of this type of instruments unattractive,” observed Wasilevsky.
Another fundamental point for the economist is that there is greater traceability and quality information on productive developments, in order to adapt Argentine agriculture to what international markets ask for. “International markets demand specialized production. The European Union, for example, calls for zero deforestation. There is basic information that is needed so that the nation can certify,” she noted.
Likewise, he maintains, it is important to improve the quality of information in relation to smaller producers. “50% of the food production consumed nationally is provided by family farming. The information there is is very basic. Understanding who provides food to Argentine agriculture is essential. Understanding who these actors are is essential to making the sector grow,” he remarked.
“With a new vision and a more appropriate regulatory environment, the agri-food sector can consolidate its role as a generator of income, jobs, food security and resilience,” he added.
