December 5, 2008


Argentina's agriculture policy boosts domestic trade

Argentina's farm policy will remain focused on ensuring domestic supply, stimulating local processing of products and exporting excess supplies, according to Ricardo Echegaray, President of agriculture trade office ONCCA.


Argentina aims to move from being a top raw grain exporter to a major supplier of finished foods, said Echegaray.


"We don't want to be the world's granary, but rather the world's exporter of foods," he said.


Instead of selling wheat, Argentina wants to sell flour; export processed soy products rather than soy; shipping corn meal and corn oil rather than corn; and turning all animal feed into meat, according to Echegaray.


ONCCA controls Argentina's agricultural exports, with the agency regulating trade strictly over the past year to curb food inflation and to ensure domestic supply.


The agency's policy is to provide exports without hurting domestic prices or volumes. To prevent further food inflation, export taxes and controls were implemented, leading to a series of farmer strikes over a four-month period earlier this year. 


Farmers said the measures drive down the domestic prices of grains and other farm products which unfairly pressurised the sector.


To compensate for high global grain prices, Argentina's government for the past year had paid high subsidies to domestic grain users, such as meat and milk producers.


However, with world grain values falling more than 50 percent from their record high this year, prices have fallen below the cut-off level for subsidies.

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