The field exports a lot, does it matter little?

The field exports a lot, does it matter little?

The fundamental importance of the agro-export sector in its role as a generator of foreign currency, which allows the development of vast economic sectors, is often underestimated. We highlight the rural dynamic’s role in the economic development during the pandemic.

Agribusiness plays a fundamental role in Argentine foreign trade. Not only does it include the main exporting complexes, but it also makes it possible to finance the imports necessary for other economic sectors with their successive trade surpluses.

With good prices and export volumes, in the first semester of 2021, agro-industrial exports exceeded their imports by USD 6.74 billion, which is what we known as a trade surplus. Of the total USD 35.3 billion exported by the country in this period, almost 27% were basic raw products and about 44% were manufactures of agricultural origin. Consequently, more than 70% of Argentine exports are related to the different agro-industrial chains throughout the country.

Of the main complexes of Argentine foreign trade, agro-industrial companies are almost entirely in surplus. Wheat, sunflower, and peanuts have positive trade balances since they make very small imports compared to the enormous contribution of exports they produce.

In the first half of 2021, the five main Argentine imports were soybeans, cars, natural gas, telephones, and medicine. Although the soy complex represents 14.5% of imports in the first semester of the year, imported SB are brought into the country as beans in order to be industrialized and re-exported as value-added subproducts, as domestic consumption is very low. That is why we can observe a high trade surplus overall in the soy complex.

For its part, the bulk of imports are made by the chemical, automotive and electronic industries. Together these add up to about 70% of the total goods that are brought into the country. This way, in addition to having low levels of imports, the agro-complex more than offsets the equation with its huge levels of exports.

What do we import? Where does it come from? What do we import for?

Almost three-quarters of Argentine imports are related to the national productive network. Only 10% of imports are consumer goods, while about 13% is made up of fuels and energy sources that are brought to the country to face the energy deficit.

However, it should be noted that a large part of the imports used in local industries end up being transformed into goods that are consumed domestically, complicating the country’s trade balance. For example, of the 12 automotive plants located in Argentina, only one exports its final products, making all others net importers of goods.

More than 60% of our imports are concentrated in the five main origins. China and Brazil are neck to neck on the highest place of the podium. The Asian giant is the origin of a large part of the imports of electrical and electronic equipment, while the South American giant is one of the main suppliers of the local automotive industry.

The United States exports energy-related goods and medicines to Argentina. The North American country is also an important source of fertilizer imports, same as China.

For its part, Paraguay is the origin of practically all the soy that Argentina imports. Our ‘Guarani’ neighbor to the north is a strategic partner in the SB production network, as well as an important energy supplier thanks to the Yacyretá dam. Finally, Germany mainly exports goods with high technological content to our country.

In addition, in the various productive networks of the country, the foreign exchange contributed by the agro-industrial sector allows imports of capital goods. These parts and varied machineries of capital goods favor the development of multiple and diverse industries and economic activities.

Based on everything mentioned, the net exports of the various agroindustrial chains allow the development of a very wide range of productive activities in the country, in addition to contributing with foreign exchange for the import of energy and consumer goods. This role of agro-chains was seen gaining strength in the last year and a half of the pandemic. The rural area is a heavy-weight net exporter, one of the qualities that stands out as a sector that matters a lot for the economic development of Argentina.

Source: https://bcr.com.ar/

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