Three years after the inauguration of the government, the confidence of rural producers hits a historic floor: almost 80% say they will not invest in the next 12 months

Alberto Fernández and Cristina Fernández de Kirchner, on December 10, 2019, upon taking office REUTERS/Agustin Marcarian.
Alberto Fernández and Cristina Fernández de Kirchner, on December 10, 2019, upon taking office REUTERS/Agustin Marcarian.

Three years after the beginning of the presidency of Alberto Fernandez, the confidence of agricultural producers is at the lowest levels in history, especially those related to the present situation and expectations for the next 12 months. Adverse weather, the country’s economic problems and political instability are the main challenges. All this in a context where the relationship of the Government with the rural leadership is not going through the best moment.

The field certainly did not have a good year. The situations in the last 12 months were extremely complex and diverse: the end of the pandemic, a war that caused commodity prices to rise, but also production costs, shortages of key inputs such as fuel, a severe drought that It hit and continues to hit agricultural activities, official market interventions and a macroeconomic policy that could never get off the ground.

This combo considerably complicated agricultural production, which had no political containment or tools that give the sector some predictability. That is why in recent weeks the Liaison Table He asked again, almost as a plea, for a change in the vision of the entire political class so that the agricultural sector is not only seen as a source of inexhaustible resources, but as a branch of the economy to be strengthened.

The leaders of the Liaison Table
The leaders of the Liaison Table

In the analysis of the current situation of the field and especially the projections of the producers for the times to come, it is worth stopping to observe the results of the bimonthly survey of the Agribusiness and Food Center of the Austral University to 406 producers whose gross production value is equal to or greater than USD 200,000 per year, which was presented this week. In it, the last Ag Barometer Index presented a significant drop in relation to the measurement of September of this year, completely canceling out the small improvements observed and ranking among the lowest in the history of the measurement.

The main fall was registered in the “Index of Present Conditions”, which with an Index of 45, ranked as the second worst among the 24 measurements, and where it is only compared with the statistics of November 2018, also with the absence of rainfall as a problem to be faced by producers. “The two components of this Index are very negative, both with regard to the current Financial situation compared to that of a year ago (44 vs 70), and with regard to the moment to make investments, which reached its peak in the month of May 2022 with a value of 109″, added the specialists from the Austral University.

On the other hand, they presented negative data Producer expectations for the next 12 months in relation to companies. In this sense, 51% of the producers surveyed think that they will be worse off. But when the query was related to the situation of the agricultural sector, 86% of those surveyed indicated that bad times are coming, ranking among the three lowest in the history of the Ag Barometer Austral.

producer confidence indices.  (Austral University)
producer confidence indices. (Austral University)

In a scenario where the weather has become the main difficulty in the field, with 58% of the producers specifying that it was the main concern for next year, the economic situation of the sector, with problems unresolved by the Government, is something that also complicates the sector and widens the uncertainty that translates into doubts when making decisions and making future investments.

The survey of the Austral University indicated that 71% of the producers responded that they do not plan to make investments in the next 12 months. In addition, they raised their concern about the levels of inflation of almost 100% per year, which they maintain distorts the relative prices of the economy, and they also asked that the current situation of the delayed official exchange ratethe currency gap and the withholdings.

On the other hand, the producers said that “the meager reserves in dollars in the central bank prevent the path to an honest exchange with prospects of lower agri-food exports in 2023, and the enormous quasi-fiscal deficit of the Central Bank and the increasing difficulty of financing in the debt market in pesos since borrowers demand rates every higher and shorter terms”.

Drought has become the main problem that producers must face
Drought has become the main problem that producers must face

In the field of financing, difficulties were raised in accessing credit by the private sector, since they ensure that the current interest rates “make any productive investment unfeasible.” On the other hand, mention was made of the problem of the poverty and to the high proportion of formal workers in a dependency relationship whose income is not enough to cover the basic basket.

Finally, as 2023 is a political and electoral yearthe study by the Austral University reflected the great uncertainty in the results and in the policies to be applied to the agricultural sector by those who are elected, “since to date no consistent economic proposals have been observed to face and overcome the serious macroeconomic problems mentioned”.

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