4. ARGENTINA
4.1 Introduction
This section describes the dismantling of the Argentina Wheat Board (Junta de granos) during the early 1990s. In considering the reformation of Argentina’s agricultural marketing channels and institutions it is important to remember that Argentina is an important agricultural nation exporting large volumes of agricultural products. Argentina wheat is an important product and has a long history of being traded internationally though Argentina became a less reliable supplier during the 1970s and 1980s as a result of both economy wide and sectoral problems. Argentina wheat production since 1980 is presented in Figure 1.
Figure 1
In the 1990s Argentina is one of the top 5 wheat exporters competing with Australia, Canada and the United States. In the 1996/97 season Argentina contributed about 10% of the international wheat trade. The destination for Argentine wheat during the period 1990-1995 is reported in Appendix 5.
The reform of wheat marketing was part of an economy wide reform process. Macroeconomic reforms were enacted to stabilise and enhance the business environment for firms and citizens and microeconomic reform was embraced to improve resource allocation and incentives. The government stated that "The deregulation policy is aimed at setting up a full market economy and promoting the modernisation of the productive system through a general renewal of competition conditions"(Anon. p25.). Within the agricultural sector the government sought "the complete transfer of commercial assets" from the Agricultural Secretariat to the private sector (Anon p132). It dissolved many regulatory bodies including the National Meat Board, the Argentine Corporation of Meat Producers, the National Sugar Board, the Milk Policy Agreement Commission, and the Dairy Promotion Fund amongst others (Anon, p26). It also eliminated the tax burden on export products which had been considerable. In 1989 for instance, export duties (as a percentage of FOB price) had been 30% for wheat, forage and sunflower derivatives, 33% for soybean derivatives, 40% for sun flower grain and 41% for soybean grain. (Anon, p36).
The Argentina Wheat Board had a relatively long life being established prior to World War II. For much of its life it was a monopoly exporter of wheat. However during the last 15 years of its life it no longer had monopoly export rights.
4.2 Board Operations During the 1980s
During the 1980s the Board had three important responsibilities:
- Participation in the grain trade;
- Operation of the network of terminal elevators; and
- International promotion.
It participated in the grain market purchasing wheat with a floor price. In the market it was competing with the international grain trading companies and was purchasing on average 25-30% of the wheat crop. This allowed the board to sell to foreign governments and international millers. Operation of the network of terminal elevators was meant to ensure that physical distribution was not a problem and that producers had efficient and equitable access to the transport system. International promotion was to enhance the marketing of the crop.
4.3 Why the Reforms
The reforms took place due to the perceived poor performance of the Board. Given the board purchased less than half of the wheat crop its floor price scheme became irrelevant to many growers. Further, its poor performance meant that it had substantial financial constraints which restricted its ability to participate in the market. Its international promotion was not very successful, in part because of the usual challenges facing an exporter of a relatively undifferentiated commodity and in part because of the supply problems the board faced. Possibly the most significant reason for the reforms was the poorly financed and managed network of terminal elevators. At the main ports the board acted as a monopoly and did not allow other companies to build their own elevator facilities. This failure to allow competition whilst at the same time providing an expensive and unreliable service meant the board had neither the support of the farmers or participants in the grain trade. The net result was their abolition.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
Contact this person
