Fact Check: Argentina

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Argentine Export Problems Indicative of Deeper Rot: Agenda Item for WTO’s Upcoming Meeting?

Despite a substantial increase in Argentine wheat production in 2014-2015 – a “jump of around 20% in planted area” – it looks as though much of it will fail to reach the export market, thanks to what has been described euphemistically as “government conservatism,” but which most observers recognize as just another symptom of the flawed economic policies of the Kirchner administration.  Ever diminishing dividends are their hallmark.

According to the Buenos Aires Cereals Exchange, Argentina harvested a total of 11.2 Million Metric Tons (MMT) in early January, “bucking the trend” that featured stark declines over the past decade.

With domestic consumption pegged at 6MMT, and carryover stocks reported at 2MMT, that leaves between 7-9 MMT of exportable wheat, “although shipments more likely will come in at around 4 to 5 MMT.”

And yet, “wary after problems in the past, the government is being very tight with export licenses,” said Sebastien Villena, representative of the CREA farm group in Pergamino, Buenos Aires province, and so far has approved only “2.2 MMT in export licenses.”

Industry analysts surmise that additional licenses will be forthcoming, but the “problem for farmers is that nobody knows when the new quotas will be announced, and for what quantities.”

“It is precisely this type of uncertainty that has caused so many to simply give up planting wheat,” said Jorge Bianciotto, who manages over 10,000 acres around Pergamino, Buenos Aires province.

[For historical perspective, consider that prior to the introduction of Argentine export quotas in 2006, the Republic used to plant and export larger volumes.  “Peak acreage was 18.5 million acres, while peak production was 16 MMT.”]

This news comes on the heels of reports just little more than three weeks ago that Argentina’s current trade surplus – with a decline in exports of 17% — is the worst since 2001.  

Perhaps the World Trade Organization (WTO), during its upcoming General Council meeting on February 20th, could further examine Argentine governmental policies on trade, and the deleterious affect they have had on the overall business climate.

Of course, the WTO has weighed in several times previously on Argentina’s protectionist bent, most recently just this past month when it rejected the Republic’s bid to overturn a “ruling in favor of the United States, the European Union and Japan against the South American country’s licensing rules used to restrict imports,” having earlier recommended Argentina fix its trade rules because those import licensing requirements, among other import restrictions, were deemed in breach of international trade rules.

Readers of this blog can attest that we have long chronicled President Kirchner’s destructive economic policies, and how they have combined – along with her decision to voluntarily default on her loan obligations – to serve only misery to the Argentine populace.

Soon after her latest default, we highlighted expert analysis that warned of the consequence of that default.  In light of this current economic news, it’s worth reading again.  So, too, is Bloomberg’s editorial of the same period, identifying Argentina’s Contempt for Its Citizens.

At what point, we wonder anew, will the Argentine populace reject the contemptuous neglect of its leaders, and demand they govern rationally and in the interests of the many, rather than just the corrupt few?

At what point will Argentinians demand their leaders meet their legal obligations and negotiate a resolution with their creditors?