Argentine Government, Working with Grain Exporters, Lifts Currency Controls
Argentina’s government has lifted currency controls that have been in place for four years after grain exporters agreed that within the next three weeks, they will export $6 billion worth of crops that have been stockpiled by the country’s farmers.
The country, which is the third largest grower of soybeans in the world, has shipped only $17.9 billion worth of grains and oilseeds so far this year, marking the lowest exports since 2009, according to data from exporters, reports Bloomberg.
The move by the government resulted in a devaluation of the strictly controlled peso, seeing it fall by 29% one day after Alfonso Prat-Gay, the country’s Finance Minister announced the decision in order to raise sales of crop.
"We have reached an agreement with grain exporters that starting tomorrow will bring in $400 million a day over three weeks," Prat-Gay said, reports Bloomberg. "Through many other channels we expect to have a total inflow of between $15 billion to $25 billion in the next four weeks.”
Argentina’s farmers have been stockpiling their crops in response to high export taxes and challenges associated with obtaining export permits. Earlier this week, newly elected president, Mauricio Macri announced that the government would eliminate exports taxes on crops including wheat and corn, while the controversial export tax on soybeans was reduced by 5%.
The changes brought by the new administration are expected to result in a flood of Argentinian crops onto world markets.
“The lifting of the FX control policy was the last measure needed to motivate crop sales for export,” Andres Alcaraz, a Ciara-Cec spokesman, said in a telephone interview from Buenos Aires, reports Bloomberg. This, and the elimination and reduction of taxes “confirms the battery of measures that will provoke huge sales.”
Argentina is predicted to be the fourth largest corn exporting country in the world and the third largest soybean exporter in the world this marketing year, according to a report released on December 9 by the U.S. Department of Agriculture (USDA). The department also raised its forecast for Argentinian wheat exports by 20% to 6 million tons due to the government eliminating or reducing export hurdles.