Argentine Economy

[QUOTE=Tessan] Brazil is the world's biggest beef exporter, sending abroad almost 2.3 million tones per year, a third of total exports around the globe. Last year it earned 4.5 billion dollars from the trade.

[url]http://www.eubusiness.com/news-eu/1202945521.32/[/url]

Projected Argentine beef exports for 2008 remain unchanged at 535,000 tons, a similar volume to last year. The Argentine government (GOA) continues to monitor and control beef exports closely. In order to keep domestic inflation under control, the GOA keeps a well-supplied domestic market by limiting exports whenever needed.

[url]http://www.cattlenetwork.com/International_Content.asp?contentid=203822[/url]

So Brazil exports about 429.06% more beef then Argentina, when they let them export.[/QUOTE]Some of you guys really aren't too good with numbers. 2.3 million is 330% more than 535 thousand, not 429%. Sort of hurts your credibility.

[QUOTE=Dickhead]Some of you guys really aren't too good with numbers. 2.3 million is 330% more than 535 thousand, not 429%. Sort of hurts your credibility.[/QUOTE]Your are right, I should have said, that Brazil exports 430% of what Argentina exports. Since 2300000/535000=4.29906. To say more, I would have had to subtract the 535 first.

Don't think my credibility is harmed.

Argentina Agro Strike to End.

Buenos Aires, June 20 (Prensa Latina) Argentina's four main agricultural employers organizations ratified the strike they have been holding against the mobile retention scheme on exports will end Friday at 24:00 local time.

[url]http://www.plenglish.com/article.asp?ID=%7B5F359246-DD63-4FE3-B875-9C6CD399912D%7D)&language=EN[/url]

It's being reported on a Cuban news site. Non of the big news services have anything on this yet. If it's true, it should show up soon.

What do you think Sidney?

[url]http://buenosaires.en.craigslist.org/apa/728914158.html[/url]

Should we jump on this one?, we might even get Jackson as a Tennet

Exon

Argentina has been in the news a lot lately. These are two articles from The Wall Street Journal on the declining economy and the state of the currency. Makes me glad I didn't buy property there.

'This government won't allow itself to be seen stepping back,'' said Rosendo Fraga, head of the Buenos Aires-based Nueva Mayoria polling company.

[url]http://www.bloomberg.com/apps/news?pid=20601086&sid=aMshkQwMMhZ4&refer=latin_america[/url]

Argentina is one of the 'breadbaskets' of the world. It exports more soybean oil than anyone else. It's also the second-biggest corn exporter (after the United States) the third-largest beef exporter, and the fifth-biggest wheat exporter. Argentina's farm exports have risen 48.2% since 2003. Farm exports were the main reason Argentina was able to rebound so fast from its economic meltdown in 2002.

With the bull market in commodities making farmers rich, you'd think Argentina would be one of the most prosperous countries on Earth right now.

Unfortunately, when the Argentine government saw how much money farmers were making, it slapped an export tax on food products. Farmers pay 46% to export soybeans right now. And if soybean prices keep rising, the tax will jump over 50%. The government has banned beef exports.

In Argentina, farmers are the upper class. The people there think of farmers as rich landowners. By taking the farmers' money with these export taxes and giving it to poor people in the cities, the Argentine government figured it would gain popularity. The politicians also figured the taxes would reduce exports, keep food in the country, and drive down prices. They'd win popularity that way, too.

They didn't count on the farmers.

[snip] called the farmers greedy. Last week, Interior Minister Florencio Randazzo said farmers were "intolerant, ungenerous and anti-democratic." He called them "coup-mongers."

[snip], Argentina now has more debt than when it announced the largest-ever debt default in 2001.

[snip]

Last month, I met an Argentine farmer in Paraguay. Paraguay is Argentina's neighbour. The farmer had come to buy millions of dollars worth of Paraguayan farmland on behalf of a small farming village in Argentina. This village used to be one of the richest farming towns in northern Argentina, he told us. But the government's new laws are ruining the way of life. So the town's farmers pooled their money together and sent this guy to Paraguay to buy up as much land as possible.

Paraguay's land is just as fertile; it's cheaper than Argentine land and the political risk there is a mere fraction of Argentina's political risk. This is why Paraguay's farmland is about to soar and Paraguay's currency – the guarani – is one of the top three best-performing currencies in the world so far this year.

I also like Brazilian meatpackers. Brazil's food industry is stealing Argentina's market share. Meanwhile, the shortage of Argentine food in world markets is supporting prices. And Brazilian meatpackers are earning higher profit margins.

[url]http://www.moneyweek.com/file/49348/how-to-profit-from-argentinas-farming-crisis-.html[/url]

BUENOS AIRES (Reuters) - The world wants more wheat, but parched soils and anger over government intervention in the market could lead Argentine farmers to sow one of their smallest crops in 15 years.

Forecasts show farmers dedicating at least 10 percent less land to the grain this season following two years of government anti-inflation policies such as export curbs and price caps.

[snip]

"I've reduced my wheat area and it's not for climatic reasons, it's for political reasons," said Sean Cameron, farmer and president of the wheat growers' association AAPROTRIGO. "For more than two years we haven't received fair value for our crops. Some of us have become frustrated."

The country's center-left government has repeatedly halted wheat exports over the last two years as a way to keep a lid on the prices of everyday staples such as bread and pasta in a nation where nearly one in four people is poor.

As well as freezing exports for months at a time, which depressed local prices, officials irked farmers by setting maximum prices in the local market.

A three-fold increase in fertilizer costs this year is aggravating farmers' uncertainty over what price they will get Cameron said.

[url]http://www.reuters.com/article/reutersEdge/idUSN2748624820080627[/url]

It's strange, because historically price controls and market interventions work so well.

(cough, cough)

[QUOTE=Tessan]The fact that the government keeps changing the rules, is what keeping investment away from oil exploration in Argentina.[/QUOTE]Changing rules is only one part of a complex equation. If there were huge profits to be made, investors wouldn't care that much about changing rules.

For instance, the article you posted mentioned several "urgence decrees" and presidential decrees that set the investment frame. During the 90s, Menem issued thousands of "emergency decrees", something not very reliable from a legal point of view since an opposite congress could quickly overturn them. However there was an "investment craze" (which lasted as much as the process of privatization of public companies lasted, not a concidence from my point of view)

Andres

[QUOTE=Tessan]I will agree to disagree with you on this. I believe if they can make allot more money, they will.[/QUOTE]You will gain more by reading about Argentine history than by just "believing". But that's your call.

[QUOTE=Tessan]Since prices are high that last few years, they should be investing to increase production to make more money. Soy production was growing about 10% a year.[/QUOTE]Of course, And they will continue to do so even if retenciones keep the current level.

[QUOTE=Tessan]They are not broke, but they are not expanding. They may even be getting smaller. When I was in Argentina a month ago, I saw on TV dairy farmers taking dairy cows to slaughter, in protest. They said they could not make money, with the government set milk price.[/QUOTE]If you take just what you see on TV to make a sound assessment, then there isn't much reason in discussing about this issue because you need to compare figures and arguments from different sectors.

I read articles that soy is slowly replacing other agricultural business due to the impressive short-term benefits. This is one of the reasons for a presumably stagnant cattle industry.

[QUOTE=Tessan]I agree, the government cannot let beef prices go to international prices. So if they want production to increase, they will have to subsidize the local meat price. If they subsidized the meat price, tax income from the exports, over time will grow and will cover the subsidy, and make the government money.[/QUOTE]That's exactly what the government is intending to do.

Andres

[QUOTE=Argento]Against the subsidies.

The most successful economy in South America, on a per capita basis is Chile. Open to investment, export oriented and a population that is increasingly educated and a currency that is remarkable in its stability. So why not use that as your example. And to further the point. 18 years ago, Chile was none of these and had a per capita base below Argentina. Now it has an appreciating currency (against the U$) education rated highest in South America and a per capita income much greater than Argentina. And surprise, surprise; little corruption, minimum crime and a law abiding citizenship.

Argento[/QUOTE]Chile is not as open as you may believe. Even during the Pinochet era, speculative capital were kept ashore by regulating foreign investments. Also, Pinochet didn't privatize sensitive industries such as copper, and it didn't come to rescue of then-failed companies such as LAN Chile.

Per capita income is higher, but you see a little less than 1 million Chilean immigrants living in Argentina and not the opposite. So those figures aren't necessarily correlated with a higher standard of living. Same would happen if you compare per capita GDP between Saudi Arabia and the US. Would you say that Saudi Arabians live better than Americans?

I would prefer to stick to the subject in discussion (retenciones)

Andres

[QUOTE=Argento]Clarification. Haven't lived here for 30 years. Have lived here for 1 year 19 years ago and also for the past 3 years. But I have been continuously involved here for 20 years. And haven't seen any improvements in the lives of the people and certainly a great drop off in education standards, massive increase in crime and a deplorable decline in business ethics, which were awful to start with.

I guess I am here because I can extract a profit here, I guess much the same reason that you work off-shore, it suits you financially, even though in your heart of hearts, Argentina is the greatest place in the world to live, make money and have a safe, contented life. The envy of the rest of the world.

Argento[/QUOTE]If you are making a profit, then the Argentine business environment isn't as awful as you claim it to be.

I don't know where did you get the idea that I believe that Argentina is the greatest place in the World to live. Are you sure you read such a statement from one of my previous posts?

Andres

[QUOTE=Tessan]With the bull market in commodities making farmers rich, you'd think Argentina would be one of the most prosperous countries on Earth right now.[/QUOTE]C'Mon Tessan. You REALLY believe that a short term increase in World commodities prices brings prosperity to a country? It takes decades of stability to get to that point.

[QUOTE=Tessan]Last month, I met an Argentine farmer in Paraguay. Paraguay is Argentina's neighbour. The farmer had come to buy millions of dollars worth of Paraguayan farmland on behalf of a small farming village in Argentina. This village used to be one of the richest farming towns in northern Argentina, he told us. But the government's new laws are ruining the way of life. So the town's farmers pooled their money together and sent this guy to Paraguay to buy up as much land as possible. [/QUOTE]"Ruining the way of life"? That's clearly an exaggeration. Even with the retenciones, those who rent the land and those who exploit it are making record profits. Maybe they are uncomfortable by not being able to not impose their rules, but that's another issue.

[QUOTE=Tessan]Paraguay's land is just as fertile; it's cheaper than Argentine land and the political risk there is a mere fraction of Argentina's political risk. This is why Paraguay's farmland is about to soar and Paraguay's currency – the guarani – is one of the top three best-performing currencies in the world so far this year. [/QUOTE]I wouldn't convert my savings in Guaranies, for sure.

As of Paraguayan rural reality, have you read recently (1 week ago) about the sizing of farms by dispossessed peasants? Lugo just won the elections, and their support was an important factor. Real trouble on the horizon there.

Andres