November 27, 2014
Agricultural industry: more than just words
For The Herald
Last week, Mauricio Macri met with the Agricultural Liason Board and presented agribusiness leaders with PRO’s proposals for the sector. The document is the result of three years of technical and political work at Fundación Pensar and with PRO’s Agribusiness Committee. Three issues are particularly interesting of this proposal: the collaborative process by which it was designed; the depth of its content; and the fact that it is not an isolated initiative but a set of ideas related to a more general vision of what Argentina’s future could be. More than just words, this is a piece of the picture of a different Argentina.
To start with the latter point, the agribusiness sector could be one of Argentina’s main drivers towards development. Argentina consolidated its place as an agri-industrial powerhouse in the last two decades. This has been a result of its natural resource endowment and more importantly of the innovation and productivity gains fostered by new players and business models that have incorporated new technologies and more environmentally-friendly practices. This process has been achieved in spite of the government rather than because of it, especially in the last decade, in which it became more of an obstacle than an enabler for the sector. In any case, from 1995 to 2008, production of grains grew at a 6.6% annual rate (compared to only a 2.8% world average) and passed the 100-million-ton mark of yearly production. According to the Food and Agriculture Organization of the United Nations (FAO), from 2012 through 2020 Argentina could increase grain production 41%, beef production 23%, poultry 15% and milk production 26%. According to CREA (Regional Consortium for Agricultural Experimentation), one of the institutions at the centre of the sector’s innovation, the potential is even bigger: Argentina produced food for an equivalent of 441 million people a year in 2012, and could go as far as 745 million in 2020. That is, it now feeds 11 Argentinas a year and could feed as much as 18 Argentinas less than ten years from now.
That potential is at the base of a vision of Argentina’s development. The two basic objectives of national development are an increase in economic production and that all of the country’s population can benefit from it. The agroindustrial sector at large, including the different cogs in its value chains, can be one of the main drivers to achieve these aims. If we define developed countries as those with a high per capita income and an equitable income distribution, there are several of those countries in which natural resources account for an important part of its production and exports; some of these are Australia, New Zealand, and Canada. At the heart of Fundación Pensar’s proposals is the aim of increasing high-paying jobs and fostering development throughout Argentina’s diverse geography, so that the less favoured regions can converge with the higher-income ones.
More production and more added value at the origin means more and better jobs for everyone, and has multiplying effects in each and every province. We believe that liberalizing all of the current obstacles to exports can and will produce enough production hikes to supply the local markets and increase exports. What we have seen in the last years is the opposite, namely in the beef sector: policies purported to protect local consumption have not only diminished production and exports but also local consumption, while local prices increased even more than inflation. This proposal spans all production chains: oilseeds, livestocks in all its forms (beef, poultry, pork, goat), dairy, grains, grapes and wines, sugar, wood, fruits, tobacco, tea, mate, olives, fishing, etc.
The content, as we have said, is exhaustive. So much so that Eduardo Buzzi of Federación Agraria (Small and Medium-sized Farmers Federation) declared that PRO was the party that had presented the most complete proposal for the sector. In a few words, the thirteen specific public policy proposals have one line that aims at liberalizing agri-industrial production and marketing: opening up exports, eliminating ROEs and increasing competition and transparency in local markets. A second line of approach vies to reduce and simplify taxes, including the elimination of all export tariffs immediately, with the exception of the soy complex which would face a more gradual approach, with a progressive 5% reduction per year. A third line, fundamental for all sectors and especially for regional economies is a boost to infrastructure to foster competitiveness. Another group of proposals aim at institutionalizing public policy design and implementation: the coordination of policies, the creation of a specific ministry and a new economic foreign relations approach. Finally, there are specific proposals for the beef and dairy sectors, for labour and family agriculture, etc.
A third point to highlight is the process by which this proposal was created and presented. This has started not three months ago in response to a specific demand but an ongoing work of more than three years since PRO set up Fundación Pensar as its public policy think tank. And the specific methodology of Pensar is not that of a laboratory, insulated from political concerns and the realities of the sectors it studies; all these ideas had been previously discussed with producers, industries, labour unions and the different actors of the sector. Plus, as we have said, it is not a specific proposal for a sector but a project contained by a more ample vision of what Argentina is and what it could be for the next generations. Agri-industry, foreign relations, macroeconomics, innovation, education, and health policies, among others, all converge in the vision of an Argentina in the road to sustainable development, a more geographically and socially cohesive country in which every person and family can freely and safely develop.
* Miguel Braun is the executive director of Fundación Pensar (PRO).