Categories: Economic News

Analysis: As economy falters, Argentina’s Massa looks to sow hope with farm bosses

By David Alire Garcia

BUENOS AIRES (Reuters) – The “super minister” tasked with rescuing Argentina’s crisis economy needs cash now, so just days into the job he has launched a charm offensive to win over agricultural industry titans to access crucial debt forgiveness before the imminent future. limit date.

Economy Minister Sergio Massa, whose unusually broad remit also extends to agriculture and trade, began courting farm chiefs, deeply at odds with the ruling center-left Peronists, in a traditional barbecue “asado” at the end of last week.

Massa’s hour-long lunch with four powerful agricultural association leaders took place last Friday on the outskirts of Buenos Aires, almost certainly aware of the government’s desperation for US dollars to meet the terms of the Argentina’s $44 billion debt deal with the International Monetary Fund. (IMF).

Specifically, a September foreign reserve target of 1 percent of GDP, or about $4.1 billion, must be met to allow the government to recoup its next payment of about $2 billion.

Loading a growing stockpile of grains onto ships for export would generate hard currency from Argentina’s massive agricultural sector, which contributed a quarter of economic output last year, at about $105 billion. This, in turn, would increase the central bank’s depleted dollar holdings.

“Massa’s starting point was only personal commitment,” said a source who reported on the meeting with the agricultural industry heads of the participants firsthand, stressing that the minister did not commit to any specific measure

“The main message told them, ‘Trust me,'” the source said.

Massa, a shrewd politician who on August 3 became the country’s third economy minister in just over a month, is widely seen as President Alberto Fernández’s last hope to stop inflation up 90% this year and the rapid decline in the value of the peso currency. which has led farmers to significantly slow down their sales.

“We are talking about issues that no one has ever raised,” one of the four main farm leaders, Jorge Chemes, told reporters after the barbecue, pointing to discussion of a possible “deep fiscal reform” that could boost farmers’ bottom lines. farmers and help persuade them. to sell more

He said lower-level technical meetings are planned for this week, with another directors’ meeting soon after.

The Ministry of Economy did not respond to written questions.


About 23 million tonnes of soybeans worth about $9 billion remain in storage, a record volume for this time of year, according to data from the national association of grain exporters CEC. Many farmers say they are sitting on their shares in the hope of better conditions or a more favorable exchange rate in the country’s tightly controlled foreign exchange market.

The gap between the official peso-dollar exchange rate and the parallel black market rate is around 130%.

Chart: Argentina Currency Split

Last week, Massa, along with the central bank, suggested a possible carrot to would-be exporters, increasing to 180 days from five days the time they have to report the dollar value of shipments. Massa has said he expects this could generate $5 billion for the Treasury in the coming weeks.

The move could benefit exporters mainly by helping them avoid accumulating unwanted weights, according to Antonio Aracre, a senior regional executive at Swiss agrochemicals group Syngenta.

Aracre said a separate “dollar-link” measure, aimed at persuading farmers to sell more soybeans, currently protects 70 percent of the dollar value of sales in the event of a feared devaluation of the official rate.

He also cited speculation that the farmer-friendly plan could be pushed further.

“If farmers think they are about to improve it, everyone will expect it,” he said.

But as long as farmers fear further weight deterioration, getting them to part with stored supplies is a tough sell.

“Look, a farmer who has soybeans is like having dollars,” said Gustavo Grobocopatel, founder of major soybean producer Grupo Grobo.

“But people run away from the weight.”

He stressed that meeting the IMF’s reserve target does not begin to touch what Argentina’s economy really needs, citing job creation and the reduction of government spending, which has nearly doubled in the past two decades

“If the politicians can’t agree on all of this,” he said, “everything else probably won’t work.”

(Reporting by David Alire Garcia in Buenos Aires; Additional reporting by Maximilian Heath and Jorge Otaola in Buenos Aires; Editing by Christian Plumb and Matthew Lewis)


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