[April 20, 2023] As published in Diario La Nación, the Argentine Secretary of Agriculture has resolved an extension on wheat shipment deadlines that could affect market competition and placement of the cereal abroad. Producers fear that this move will result in a loss of prices and international influence for Argentina, especially as the country struggles with the impact of drought on its crops.
Resolution 140 of the Secretary of Agriculture, signed by Juan José Bahillo, grants an exceptional automatic extension of 360 days to the sworn statements of sale abroad (DJVE) “with the start of shipment between December 1, 2022, and July 31, 2023”. This decision follows the initial 360-day postponement of wheat shipments for December to February, announced last November.
Sources from the agro-export sector defended the measure, arguing that it was necessary due to pending shipments and a lack of merchandise. They pointed out that very few shipments were registered for March, and companies in the sector requested the same conditions as others had until February.
Government’s Extension on Wheat Shipment Deadlines Raises Concerns
However, various interpretations of the impact of this decision have emerged within the private sector. Ernesto Ambrosetti, a consultant in agribusiness, criticized the resolution, stating that the cost will ultimately fall on the producer. He also highlighted that wheat’s share in the value of bread is only 13%, with more than 250 grams per kilo of bread consisting of taxes and fees.
Effects of Drought and Government Decisions on Argentina’s Agriculture Industry
Due to the drought, the wheat harvest plummeted by 10 million tons, reaching a volume of 12.4 million tons. The Rosario Stock Exchange (BCR) revealed that between December and April, wheat shipments to the world were 1.9 million tons, an 83% drop compared to the same period in the previous cycle.
Ariel Tejera, from Grassi SA, mentioned that the new regulation extended commitments up to July for 360 days, which could result in lower prices in the domestic market due to the reduced participation of exports.
Argentina’s Competitiveness in International Market at Risk
Paulina Lescano, an analyst, warned that Argentina is not competitive, even if the export market operated freely, compared to the Black Sea region, especially Russian wheat with FOB prices between $270 and $280 per ton. Meanwhile, Argentine wheat FOB prices are between $330 and $320.
Carlos Pouiller, director of AZ-Group, believes that the official resolution aims to ensure the domestic wheat supply. However, Gustavo López, from Agritrend, suggested that the measure would affect prices by reducing competition.
As Argentina continues to be the leading provider of wheat to the Brazilian market, the long-term implications of this measure on international competitiveness remain uncertain. The country’s ability to maintain its presence in the global market may depend on the impact of drought, government decisions, and future demand for imports from other nations.