Argentina farmers say special soy exchange rate fails to solve issue

August sales were 10% lower than last year
calendar icon 6 September 2022
clock icon 2 minute read

Argentina's farmers said Monday that the government's decision to improve the exchange rate for soybeans exported in September is a temporary "patch" that will likely boost sales of the crop during the month, but fails to solve root issues, reported Reuters.

Market speculation and fluctuation between the exchange rates of the devalued official Argentine peso and the stronger black market rate have led farmers in the world's largest exporter of soybean oil and meal to stall sales to get more of a bang for their buck.

At the end of August, farmers' sales from the 2021-2022 harvest were 10% lower than the same period of the 2020-2021 harvest, according to the agriculture ministry.

Soybean exports from Argentina are the country's main source of foreign currency. To boost sales of the grain and to put dollars in the bank, the government announced on Sunday a preferential exchange rate for soybean exports in the month of September.

Effective Monday through the end of the month, the exchange rate for soybean farmers will be 200 pesos per US dollar, up from the previous rate of 139 per dollar, the official exchange rate.

"It's not bad," Juan Granero, a small-scale farmer in the Buenos Aires province told Reuters. "If you think about it, we'll be up to 72,000 pesos per tonne, versus 50,000."

The bonus, while helpful, will be shortlived, Granero said.

"It's a patch, and like all patches, at some point it explodes," he said. "You can patch a tire two million times if you want, until one day it doesn't work anymore."

The benefit will also likely only help larger producers who have yet to sell the last of their crop, said Carlos Achetoni, president of the Argentine Agrarian Federation (FAA).

Last week, Argentina's oilseed industry and grains export chambers CIARA-CEC said the dollar value of farm exports rose 11% in August from the same time last year to a "historic record."

Argentina, facing a deep financial crisis, is trying to meet goals agreed on with the International Monetary Fund, including increasing foreign currency reserves.

© 2000 - 2024 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.