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Argentina

Ramiro CostaChief Economist

State of Argentine Farm Policy and market conditions post‐election

2016 Agricultural Outlook ForumUSDA Buenos Aires Grains Exchange

Source: The National Institute of Statistics and Census. Argentina

ARGENTINE AGRICULTURE IN CONTEXT

Share of the agro‐industrial sector in the total value of exported goods 

59%

8%

34% Agriculturalproducts

Minerals andEnergy

Manufacturedgoods

2016 Agricultural Outlook ForumUSDA Buenos Aires Grains Exchange

ARGENTINE AGRICULTURE IN CONTEXT

Source: USDA Production, Supply and Distribution Online (02‐16‐2016). 2015/16 Feb

Soybean oil(48,5% share) and soybeanmeal (47,9% 

share)

Sorghum

SoybeansCorn

Sunflower and Sunflower meal

Barley

Argentina: global exports ranking

30%24%

20%16%

12%7% 4% 3%

‐50%

‐40%

‐30%

‐20%

‐10%

0%

10%

20%

30%

40%

Colombia Peru EuropeanUnion

Bolivia Mexico U.S Brazil Chile Argentina

30%24%

20%16%

12%7% 4% 3%

‐43%‐50%

‐40%

‐30%

‐20%

‐10%

0%

10%

20%

30%

40%

Colombia Peru EuropeanUnion

Bolivia Mexico U.S Brazil Chile Argentina

2016 Agricultural Outlook ForumUSDA Buenos Aires Grains Exchange

Producer Support Estimate (PSE)

Source: IADB OECD 2013

Date may‐15

Soybean FOB Arg. 360,7 USD/tn

Export Tax 126,2 USD/tn

FOB ‐ Export Duty 234,5 USD/tn

Main agricultural policies: 2002‐2015

Buenos Aires Grains Exchange2016 Agricultural Outlook ForumUSDA

Tax• Exports Duties

NTB• Quantitative restrictions• Other non‐tariff barriers on export

Controls

• Maximum prices for live cattle• Maximum prices for retail sales

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Infrastructure

2016 Agricultural Outlook ForumUSDA

80% of soybean production: less than 300 miles away from ports

85% transport by: truck

2/3 of the national and state roads: not paved.

February 2016 Buenos Aires Grains Exchange

High tax burden: ordinary taxes + export taxes.

Lower crop prices: export taxes + export quotas + other regulations.

Results: Intervention Policies

Negative impact on incentives for production:

• Investments: technology

• Area growth‐rate

• Agricultural practices

5%

2%

1%

0%

1%

2%

3%

4%

5%

6%

1993‐1999 2000‐2006 2007‐2015

Area Growth Rate

9.5429.672

9.826

13.4 13.9

0

2

4

6

8

10

12

14

16

01/O

CT/2015

06/O

CT/2015

09/O

CT/2015

15/O

CT/2015

20/O

CT/2015

23/O

CT/2015

28/O

CT/2015

02/N

OV/2015

05/N

OV/2015

11/N

OV/2015

16/N

OV/2015

19/N

OV/2015

24/N

OV/2015

30/N

OV/2015

03/DEC

/2015

10/DEC

/2015

15/DEC

/2015

18/DEC

/2015

23/DEC

/2015

29/DEC

/2015

04/JAN

/201

607

/JAN

/201

6

USD

AR$ / USD Exchange Rate

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Election: November 22nd

Presidential inauguration:December 10th

Removal of:

Currency controls: December 17th

Export taxes: December 17th

Export permit system: December29th

TimelineNew Administration: Significant Ag. Policy Changes 

2016 Agricultural Outlook ForumUSDA

ARGENTINA TOWARDS 2024/25

World and Argentine Agribusiness Reference Scenario to 2024‐25INAI FOUNDATION

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Production Estimates: baseline scenario

2014/15 to 2024/25

Source: INAI Foundation & USDA Baseline

2016 Agricultural Outlook ForumUSDA

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Production Estimates: new scenario

2014/15 to 2024/25

2016 Agricultural Outlook ForumUSDA

x 6

Source: INAI Foundation & USDA Baseline

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Source: INAI Foundation

2016 Agricultural Outlook ForumUSDA

Wheat

New Scenario: short‐run changes 

Corn

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

05/06

06/07

07/08

08/09

09/10

10/11

11/12

12/13

13/14

14/15

15/16

16/17

17/18

18/19

19/20

20/21

21/22

22/23

23/24

24/25

000 ha

s

Historical Baseline New Scenario

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Exports: Argentine market share

Source: INAI Foundation

2016 Agricultural Outlook ForumUSDA

2014 2024 baseline

2024 new scenario

Total 7,4% 6,7% 9,5%

Cereals 5,2% 4,5% 8,0%

Wheat 2,7% 2,3% 4,9%

Corn 11,6% 8,8% 17,9%

Soybean 9,1% 7,6% 9,1%

Soybean Oil 49,4% 41,1% 48,5%

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Final Remarks

Argentine new ag policy framework

2016 Agricultural Outlook ForumUSDA

A new normal:

On the track of growth New opportunities: investments in agribusiness

There is a new agenda:

Smart integration to world markets Work on productivity

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Thank you!

Ramiro Costa

rcosta@bc.org.ar