Malbec dollar, lemon and olive: what is the government evaluating and what is the business proposal for the exchange rate window to be successful

Drought, frost and hail severely affected the wine industry, which would have a special dollar from April

There are several regional economies that demand a differential dollar to be able to compete in export markets. The effects of the drought, with drops in production, added to the rise in costs of up to 150% that many sectors had already been registering and caused an explosive combo that forced the vast majority of activities to insist on their claims to the Government. to achieve some salvage.

The most concrete example, and one that achieved the public promise of the Minister of Economy, Sergio Massa, that there would be a differential dollar, is that of the wine sector. During the National Harvest Festival, the official anticipated that as of April 1, wine exports would be made at a higher exchange rate. But other regional economies await similar measures, especially those with a high export percentage. What is the economic team analyzing? Will there be an exchange rate for each activity, or will it be the same dollar for several sectors?

“In the case of wine, a longer window of time is being considered than what the soybean dollar was”

From the Government they confirmed that they are working against the clock to reach the first week of April with a definition regarding how the “Malbec dollar” will be implemented. They affirm that it has not yet been resolved, but that in principle they would start with that activity, to later be able to add others. “At no time was there talk of the same dollar for all regional economies. In the case of wine, a longer window of time is being considered than the soybean dollar, but details of the implementation are still being analyzed,” said official sources. They added that “work is being done with the rest of the regional economies and that Massa’s intention is to announce measures to alleviate the effects of the drought.”

Directors of Bodegas de Argentina, the main chamber of the sector, met a few days ago with Agriculture officials to put the problems of the sector on the table. Consulted a manager of the entity, he told Infobae that “long terms are good for the industry, unlike the soybean dollar.”

“They buy from us, we don’t sell when we want. And when we have a purchase order, it sometimes takes up to 60 days to prepare it, and from the moment you ship the merchandise, you have terms of between 90 and 120 days to collect. That is why we want the window of exchange rate improvement to be as long as possible,” added the businessman.

The citrus industry also demands a differential exchange rate due to the loss of competitiveness

The sector is going through a very complex scenario, with a sharp increase in costs due to the low harvest and extremely high competition in international markets. “We don’t have grapes to make wine, we have imported costs; It is the only finished product that reaches the table of consumers in the world and there is high competition with other markets, for example, Chile. I don’t think there is a regional economy harder hit than wine right now,” said another source from the sector. The raw material increased between 200% and 300% in the last year and packaging costs, approximately 150%, according to the managers consulted.

In the meeting neither time nor value was discussed. The sector expects a new call for the next few days and is confident that as of April 1, wine will be able to be exported at a higher dollar. Wine exports amount to USD 800 million. From the Government they recognized that “the wine suffered a lot with the drought, late frosts and hail” and affirmed that “it will be seen with each sector what their needs are”.

“I don’t think that today anyone considers a special dollar for each fruit. We should have one for all” (Carbonell)

From the citrus sector, the president of Federcitrus, José Carbonell, affirmed that he also had contacts with officials of the economic team last week, together with the representatives of the production of the Alto Valle de Río Negro and the expectation is that these sectors will also be included to the extent to be announced on April 1. But he admitted that the sectors, even within the fruit sector, are diverse, have different harvest times and, therefore, would require a window of exchange rate improvement at least until the end of the year.

“I don’t think that today anyone considers a special dollar for each fruit. We should have one for everyone. But it should last until the end of this government, since for the pip (pear, apple and table grape) it should be applied right away, as well as for lemons, for oranges, after July, and mandarins are delayed.” Carbonell said.

“You have to resort to these measures that are patches, because you cannot establish a cost in the future if we do not know how the exchange rate will evolve” (Bustos Carra)

The president of Federcitrus stated that as a result of the loss of competitiveness, an export of 2 million tons of fruit in 2009 went up to around 800,000 tons last year. And he exemplified: “Today a box of 18 kilos of lemons should cost USD 18 FOB to make it work. Today it is below that and the costs continue to rise every month.”

For his part, the general manager of the Mendoza Olive Association (Asolmen) and treasurer of the Board of Directors of the Argentine Olive Federation (FOA), Mario Bustos Carra, assured that in his sector they are waiting for the type of differential exchange for wine and then “try to find a mirror of that dollar.” Regarding the sector, the manager stated that “it has the general problems that all regional economies have, the product of a total lack of economic policy.” “You have to resort to these patchy measures, because you cannot establish a future cost if you don’t know how the exchange rate will evolve,” said Bustos Carra, who added that 80% of olive oil and 70 % of olives are exported.

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