Agricultural policies in Argentina have suffered the same volatility as other policies, especially macroeconomic and trade policies. The open economy approach of the 1990s was followed by a period of economic isolation with higher tariffs and export taxes over 2001-15. The current Government has renewed the open economy approach since 2015. The Ministry of Agriculture was only separated from the Ministry of Economy in 2009, while a broader focus on the whole value chain was introduced in 2015 and reflected in the new name of Ministry of Agroindustry, which is part of the Ministry of Production and Labour since September 2018. Several decentralised institutions with responsibility for implementing agricultural policies and services have a long tradition of professionalism; these include the research and extension institute, INTA, and the animal and plant health service, SENASA. There are very few input or output payments to producers in Argentina, with the exception of programmes under the Special Tobacco Fund (FET), preferential credit mainly to small producers through FINAGRO and some infrastructure programmes such as PROSAP.
Agricultural Policies in Argentina
Chapter 3. Agricultural policy framework and objectives
Abstract
3.1. A history of back and forths on trade openness
Since the beginning of the 20th century, Argentine agricultural policies have shifted back and forth between free trade and import substitution under different economic policy frameworks (Table 3.1). The country experienced a golden age between 1860 and 1915, when its agricultural exports boomed. But after the 1929 crash the country took a series of measures that ended free trade. The economy gradually opened again in the period leading up to World War II, but after 1945 the country decided to keep trade barriers (Lema, 2018[1]).
Temporary trade liberalisation took place in the late 1970s, and in the second half of the 1980s, Argentina explored ways to trade more with its neighbours and with the world. The first step was economic integration within MERCOSUR in 1991 and then signature of the WTO agreement in 1994. This was followed by substantial liberalisation of trade throughout the 1990s, the biggest opening of the economy in more than 60 years. A key measure was the substantial reduction of tariffs, with an average external tariff of 11% by the late 1990s and no export restrictions (Lema, 2018[1]).
However, after experiencing a financial crisis in 2001, the country once again changed its policy paradigm and moved back to closed markets. With a strong real depreciation of the peso, domestic price stability and the fiscal balance were at stake, and export taxes on agricultural products were reintroduced. Taxes on agricultural exports were the preferred instrument to maintain the fiscal balance because they were easy to implement and effective in raising revenue (Chapter 5). In the context of rising international agricultural prices, these taxes enabled an increase in government revenues.
In 2015, the new government reversed the previous agricultural policies by eliminating export taxes for most agricultural and livestock products (except those for soybeans and soybean oil, which were significantly reduced)1. All export quotas were eliminated, and the exchange rate was deregulated (i.e. allowed to float). This resulted in favourable changes in relative prices and increased revenues for grain and meat producers. Agricultural policy is now focused on integration in world markets. When the new government came into power in 2015, it carried out a process of consultation and consensus-building with different stakeholders in the agro-industrial subsectors, with provincial and local governments, and national Ministries that relate to the sector. On the basis of this consultation process, a strategic agricultural policy plan was developed for the 2015‑20 period.
The main objective of this plan is to make Argentina a benchmark country in the agro‑industrial development of food, based on productivity, competitiveness and development in technology and innovation, with actions that lead to the productive and commercial integration of the sector in international markets (Ministerio de Agroindustria, 2018[2]). To achieve this general objective, five strategic guidelines were developed:
Achieving the maximum productive potential of the regions in a sustainable way, by preserving biodiversity and improving the quality of natural resources.
Promoting product differentiation and value-adding, by fostering national development in the whole agroindustry sector.
Improving the competitiveness and transparency of the agroindustrial chain and increasing value added and exports through market diversification.
Promoting territorial development with a focus on family farmers, small‑ and medium-scale farmers, and rural workers.
Contributing to global food security by improving diversity and access to food, and ensuring food safety and quality.
Furthermore, the general objective was supported by two high-level initiatives the “Agroindustry Strengthening Plan” (Plan de Fortalecimiento de la Agroindustria) and the “Irrigation Plan” (Plan de Riego). These initiatives are part of the long-term development framework of the national government under the objectives of “National Productive Agreement” (Acuerdo Productivo Nacional) and “Infrastructure Development” (Desarrollo de la Infraestructura), respectively.2 Moreover, other public investments impacting the sector fall under the national public investments strategy of Belgrano Plan, which prioritises social, productive and infrastructure investments in the less developed regions in the north of Argentina (Box 3.1).
Box 3.1. The Belgrano Plan
The Belgrano Plan is a set of initiatives to promote the development of the Northern region of Argentina, which includes the provinces of Jujuy, Salta, Tucumán, Santiago del Estero, Catamarca, La Rioja, Formosa, Chaco, Corrientes and Misiones. These provinces have lower levels of economic and social development than the rest of the country. The Plan focuses on social, infrastructure and production areas. The Plan, run by the Chief of the Cabinet of Ministers and set out in Decree 435/2016, has no specific budget; rather, it co‑ordinates all infrastructure and social actions in the Northern provinces. The Plan works in an articulated way with the different national ministries, through established working groups, following up on projects, programmes and works carried out throughout the Northern region.
There are four working boards: Social Development, Productive Development, Infrastructure and Regional Integration. Each board has a different composition of Ministries. The Secretariat of Agroindustry is represented only on the Productive Development Board.
The Belgrano Plan co-ordinates actions of all the national agencies in the provinces to enhance policies for the region, as well as initiatives not focused on the region but which have an impact on it.
The Plan seeks to improve: 1) The Human Development Index (10 provinces that comprise the Belgrano Plan are lower on the Index than the rest of the country); 2) Housing, especially sewerage, for 61% of the population in the region; 3) Exports (the region represents only 10% of the country's total exports).
The national government has developed actions in the following areas: improve social and housing conditions, housing infrastructure and urban planning; investments to consolidate the connectivity and social and economic integration of the region; rehabilitation and renewal of roads and corridors, including the General Belgrano Cargas Railroad; investments in transportation services; construction of roads beyond the national road network; infrastructure for a rational, integral, and equitable multiple use of water resources, including for productive purposes in the agro-industrial sector, where 34% of the investments fall under “Policies for increasing production and productivity in agro‑industrial chains in a sustainable manner”; and tourism development. 35% of the Federal Solidarity Fund for infrastructure works is transferred to the Belgrano provinces.
3.2. Institutional arrangements3
In Argentina the Secretariat of Agroindustry (Ministry of Agroindustry up to September 2018) is responsible for the management, formulation and implementation of agricultural policies. Up to 2009, responsibility for agricultural policies lay with the Ministry of the Economy. The Ministry of Agroindustry was created in 2016 after an institutional reform of the previous Ministry of Agriculture (Decrees 13/15, 32/2016 and 302/2017), with the aim of broadening the scope of the Ministry from just focusing on primary production to the agroindustry sector as a whole. This change reflects the view that the primary productive sector and related industries are key strategic participants in the economic development of the country (Ministerio de Agroindustria, 2018[2]). The reform also responded to efficiency needs to cut red tape, improve co-ordination and avoid overlapping functions among national and provincial public agencies. Argentina is a federal country and some policy competencies and their implementation correspond to the provinces. Provincial governments have a leading role on regional cross-sector development strategies (OECD, 2016[3]).
The competences of the Ministry of Agroindustry did not completely change in 2016 nor in 2018 when it became a Secretariat of the Ministry of Production, only the emphasis in the areas of action and the implementation and co‑ordination mechanisms. The Secretariat of Agroindustry had four secretariats and seven sub‑secretariats. Each secretariat has its own remit and assists the Secretary of Government of Agroindustry in the design, implementation and co‑ordination of different policies and actions. The four secretariats are the Secretariat of Agriculture, Livestock and Fisheries, the Secretariat of Food and Bio‑economy, the Secretariat of Family Agriculture, Coordination and Territorial Development, and the Secretariat of Agro‑Industrial Markets.
Figure 3.1. Organigram of the Secretariat of Agroindustry of Argentina
Note: In early September 2018, several institutional arrangements in the government changed, including the integration of the former Ministry of Agroindustry into the Ministry of Production. Several changes are still underway and therefore the current organisation does not include institutional adjustments that will eventually take place.
As part of the institutional reforms undertaken by the new Government in 2016, the Federal Agricultural Council (CFA) was strengthened and broadened to improve the dialogue with the agro-industrial sector in the provinces. The CFA aims to foster dialogue between national and provincial authorities by identifying, prioritising and addressing problems at local, regional and national levels and by providing support and technical co‑operation. The CFA is a consultative advisory and sectoral co‑ordination body to the National Executive Branch (created by the Law No. 23843/1990). It approves the sectoral plan and budget and meets every six months. The CFA is chaired by the Minister of Agroindustry and includes the heads of Ministries of each province. The CFA has five regional commissions: the Northwest, the Northeast, New Cuyo, the Pampas, and Patagonia. The CFA’s main responsibilities include: 1) preparation of legislative initiatives with federal application and of administrative regulations; 2) identification of instruments for the promotion of regional economies (agricultural production outside of the Pampas region); 3) strategic design of public policies aimed at provincial, regional and national development; 4) definition of productive strategies by value chain.
Other institutional reforms implemented in 2016 focused on reducing red tape in the sector. The creation of the Platform of Procedures at Distance (Trámites a distancia, TAD) allows all procedures related to a ministry to be carried out remotely. Similarly, National Executive Order 1079/2016 created the Foreign Trade Exclusive Desk (Ventanilla Única de Comercio Exterior, VUCE) aimed at optimising and digitally unifying the information and documentation for import, export and customs transit (Ministerio de Agroindustria, 2018[2]).
Decentralised agencies
The public institutional framework in Argentina is relatively straightforward and comprises five main institutions under the Secretariat of Agroindustry (Figure 3.2): the National Agricultural Technology Institute (Instituto Nacional de Tecnología Agropecuaria, INTA), the National Service for Agro-Food Health and Quality (Servicio Nacional de Sanidad y Calidad Agroalimentaria, SENASA), the National Institute of Seeds (Instituto Nacional de Semillas, INASE), the National Institute of Viticulture (Instituto Nacional de Vitivinicultura, INV) and the National Institute of Research and Development of Fisheries (Instituto Nacional de Investigación y Desarrollo Pesquero, INIDEP). These institutions are financially and politically independent but have to follow the main guidelines of agricultural policy and to report to the Secretary of Agroindustry for guidance.
INTA is by far the most important institution within the public system, in terms of both budgetary allocation and number of employees. INTA was created in 1956 by Decree‑Law No. 21680/56 and has two main functions: agricultural research and development and extension services. INTA is a decentralised institution with operational and financial autonomy and is mainly funded by a budgetary allocation of 0.45% of the Cost Insurance and Freight (CIF) value of imports (Law No. 25641). INTA serves a wide spectrum of farmers, ranging from those who produce for own-consumption to those producing for international markets. INTA has played a key role in the generation and transfer of knowledge and is present throughout the country. However, in recent years its main activities have shifted towards the implementation of social rural policies funded by different ministries, at both national and provincial levels. This can impact its effectiveness in providing innovation services (Chapter 6).
SENASA’s functions date back at the end of the 19th century and are basically to provide sanitary guarantees for exports. However, SENASA was formally created in 1996 (Decree No. 660 and Law No. 24629) to merge the separate animal and plant health institutes. SENASA is financially autonomous and is funded by budgetary allocation and by fees charged to farmers for services provided. SENASA’s mission is to plan, regulate, execute, supervise and certify processes and products, as well as to implement controls on animal and plant health, food safety, hygiene and quality, safety of products and associated inputs, across the different stages of primary production, processing, transformation, transport and trade. SENASA’s main challenge is ensuring the capacity and reach of its technical personnel to cover the entire country, and to enforce the laws related to its objectives (Chapter 8).
Figure 3.2. The institutional agricultural framework of Argentina
Source: Authors based on information from the (Ministerio de Agroindustria, 2018[2]).
The seeds institute INASE was originally created in 1973 (Law. No. 20247/73) but later renamed and its functions redirected in 1991 (Decree 2817/91). Dismantled (Decree 1104) in 2000 and recreated in 2003 under the original Decree (2817/73), its main function is to promote the efficient production and commercialisation of seeds, while guaranteeing the identity and quality of seeds acquired and protecting the property rights of phyto-genetic creations. INASE reports directly to the Minister of Agroindustry and is publicly funded.
INASE’s main objectives are: i) to interpret and apply the Seed Law and Phyto‑genetic Creations Law (Nº20247); ii) to exercise the law enforcement derived from its implementation; iii) to issue national and international certifications for any plant organ destined for sowing, planting or propagation, while complying with any relevant agreement signed by Argentina; iv) to protect and register the intellectual property of seeds and phyto‑genetic and biotechnological creations; v) to propose and apply regulations regarding the identity and quality of seeds. INASE’s main challenge is to improve the enforcement of intellectual property rights (IPR) laws (Chapter 6).
The viticulture institute INV oversees the technical control of production, industrialisation and commercialisation of grape and wine making, and the control of production, circulation, and trading of ethyl alcohol and methanol. INV regulates and implements several laws: Law No. 14878 on wine; Law No. 24566 on alcoholic beverages; Law No. 25163 on general rules for the designation and presentation of wines and spirit drinks, their indication of geographical origin and their controlled designation of origin; Law No. 26093 on regulation and promotion for the sustainable production and use of biofuels. INV is funded through fees for the services it provides and from the fines it applies (Chapters 6 and 9).
The fisheries institute, INIDEP, is a decentralised institution created by Law No. 21673 that carries out fisheries research and development. INIDEP is fully resourced with public funds. Law No. 24922 provides that the Federal Fisheries Council sets the objectives, policies and requirements of scientific and technical research related to marine‑living resources, while INIDEP carries out planning and execution of scientific and technical activities with the provinces and other bodies or entities. The INIDEP research programme generates and adapts knowledge, information, methods and technology for the development, use and conservation of Argentine marine fisheries (Ministerio de Agroindustria, 2018[2]).
Private institutions
Argentina has a long history of private institutions that organise stakeholders and farmers. These include co-operatives, confederations, federations, supply chain farmer organisations, chambers and societies, among others. Some of these private institutions are: Confederación Inter-cooperativa Agropecuaria Limitada (CONINAGRO); Confederaciones Rurales Argentinas (CRA); Federación Agraria Argentina (FAA); Sociedad Rural Argentina (SRA); Asociación Argentina De Consorcios Regionales De Experimentación Agrícola (AACREA); Asociación Argentina de Productores en Siembra Directa (AAPRESID); Coordinadora De Las Industrias De Productos Alimenticios (COPAL); Confederación Argentina De La Mediana Empresa (CAME); Asociación De La Cadena De La Soja Argentina (ACSOJA); Asociación Maíz Argentino (MAIZAR); Asociación Argentina De Trigo (ARGENTRIGO); Asociación Argentina De Girasol (ASAGIR); Cámara de la Sanidad Agropecuaria y Fertilizantes (CASAFE); Cámara de la Industria Argentina de Fertilizantes y Agroquímicos (CIAFA); Fertilizar Asociación Civil (FERTILIZAR); Asociación de Cooperativas Argentinas (ACA); Instituto de Promoción de la Carne Vacuna Argentina (IPCVA); Corporación Vitivinícola Argentina (COVIAR) among others (Chapters 4 and 9, and Annex A).
These private institutions have played an important role in the development of the agricultural sector; for example, in the establishment of land tenure, the generation and adoption of new technologies, and in the design of long-term agricultural policies. On several occasions they have served as a counterbalance to unstable policies.
3.3. Overview of the main agricultural policy areas
The policy measures that provide support to agriculture in Argentina are decided and implemented not only by the Secretariat of Agroindustry, but also by other ministries and government agencies. Following the OECD methodology to estimate the support to the sector based on implementation criteria, policy measures can be classified under different categories (OECD, 2016[4]). The first main distinction is between: policies that provide direct positive or negative support to farmers for example, via minimum reference prices, taxes, subsidies or payments; and policies that provide support to the agricultural sector as a whole, such as public expenditures on R&D and extension services or animal and plant health. Argentina concentrates most of the budgetary programmes on the provisions of general services such as agricultural innovation system or inspection services. Compared with producer support, these programmes are less distorting and better targeted to enhance the productivity and sustainability of the sector. The country provides few payments to farmers or highly distorting measures, except for the export taxes.
Support to producers
In Argentina, the majority of agricultural products do not receive price support; on the contrary, export taxes and restrictions were imposed on several agricultural products over the past decades, until 2015. An exception is the positive support provided to tobacco producers in the form of a supplement to market prices (payment based on output) as part of a broader policy arrangement called the Special Tobacco Fund (Fondo Especial del Tabaco FET, Box 3.2).
Box 3.2. The Special Tobacco Fund (FET)
The Special Tobacco Fund (Fondo Especial del Tabaco FET) was created in 1972 (Decree Law 19.800) to provide additional revenue to producers. The fund is financed by a tax of 7% on all tobacco sold in Argentina, which goes directly to the Secretariat of Agroindustry. These funds are not mixed with the regular budget: 20% of the funds are spent by the Secretariat of Agroindustry and 80% are transferred to the tobacco producing provinces proportionally to their share in national production. The beneficiary provinces are, in decreasing order, Jujuy, Salta, Misiones, Tucuman, Corrientes, Chaco and Catamarca. The sector is dominated by small producers with critical economic and social difficulties, and the benefiting regions are all also included under the Belgrano Plan.
Historically, the share of the fund managed by the provinces was mainly spent to supplement prices to producers. However, after the signature of the WTO agreement in 1994, Argentina committed to reduce this support by 1.3% yearly over three years. Argentina’s Total Aggregate Measurement of Support (Total AMS) commitment level in WTO constrains expenditure to support the tobacco producer price. Currently only 20% of the FET funds spent by the provinces are dedicated to support tobacco prices, with the rest being spent on programmes to support producers’ fixed and working capital, to provide technical assistance, to invest in local infrastructure and even to provide social and health assistance. These programmes are declared under the Green Box in WTO; according to the PSE methodology, they cover payments based on inputs, general services, and some are not specific to agriculture even if they are implemented in tobacco producing areas.
Each province approves its set of Annual Operative Projects (POAs) that are then approved by the Secretariat of Agroindustry before the funds are transferred. Each province distributes the funds with different criteria on the basis of their POA.
In 2017, the total FET was ARS 5 762 million (Argentina pesos) in 2017, the same order of magnitude as expenditures on INTA. The fund was initially focused on supporting tobacco producers in poor provinces, but its implementation is now constrained by the WTO and its objectives are blurred. The programme would need to redefine its objectives and implementation towards facilitating the adjustment and economic development of tobacco producers and their families.
Argentina provides very limited input subsidies, mostly in the form of implicit interest rate subsidies through preferential credit provided by FINAGRO. These credits are targeted to a range of products and finance investment and working capital. A new fund, FONDAGRO, was created in 2017 to finance investment in the sector at preferential interest rates, but its scope is presently limited.
There are almost no direct payments to producers in Argentina. Limited amounts are provided as disaster assistance in response to extreme weather events, mainly droughts (Chapter 8). There are no national direct payments for agri-environmental services, and few at provincial level. Among these, since 2017, voluntary payments on area have been provided in the province of Cordoba subject to the application of good agricultural practices.
General services to the sector
A significant share of public expenditure in the agricultural sector is directed to general services, mainly agricultural knowledge and innovation, and food inspection and control. Research and development and extension services are mainly provided by INTA, while animal and plant health and input control services are provided mainly by SENASA.
Agricultural and rural infrastructure has received very little investment over the past decades, and limited large-scale irrigation works have been undertaken. The Agricultural Provincial Services Programme (PROSAP), financed by the Inter‑American Development Bank (IADB) and managed by the Secretariat of Agroindustry has been the exception, investing mainly in large agricultural irrigation infrastructure.
Consumer measures
During the period 2007-10, the National Office of Agricultural Trade Control (ONCCA) subsidised the price of some food commodities bought by first processors, including wheat, beef and milk. Argentina has no social protection programmes to support food consumption or distribute food among households in need. However, the country has a long history of providing free services to its population, such as public health care and basic education, and subsidies for utilities like electrification, fuel and water. These latter are currently being phased out.
Biofuel policy
Argentina is a large exporter of biodiesel produced from soya and has an active biofuel policy. The Biofuel Law 26.093 approved in 2006 establishes compulsory blend mandates since 2010, starting at 5% but then progressive increased to 10% for diesel and 12% for gasoline. The Law also assures that, up to the end-term of the Law in 2021, the biofuel production supplied in the domestic market will be purchased at a price calculated according to a formula. Biofuel production can also benefit from some fiscal measures. First, exports of biofuels have historically had a lower tax rate than the export of grains and oilseeds, creating incentives for processing rather than exporting raw inputs (Chapter 5). Secondly, the Law establishes that domestic consumption of biofuels benefits from a VAT rebates under certain conditions, which, however, have not been met by exporting companies.
References
[1] Lema, D. (2018), Agricultural policies in Argentina, Insituto de Economía- INTA, Buenos Aires.
[2] Ministerio de Agroindustria (2018), Sector background information provided by the Ministry of Agroindustry for the OECD Review of Agricultural Policies of Argentina.
[3] OECD (2016), OECD Territorial Reviews: Córdoba, Argentina, https://doi.org/10.1787/19900759.
[4] OECD (2016), OECD's Producer Support Estimate and Related Indicators of Agriculture Suport: Concepts, Calculations, Interpretation and Use (The PSE Manual), Trade and Agriculture Directorate, http://www.oecd.org/tad/agricultural-policies/full%20text.pdf (accessed on 07 June 2018).
Notes
← 1. In early September 2018, while this review was being written, the government decided several policy measures in response to an economic turmoil triggered by a large depreciation of the peso. Among these measures, the introduction of taxes on all exports will directly affect the agricultural sector and the estimate of support.
← 2. Similarly, the national development framework of the “State Modernisation Plan” (Plan de Modernización del Estado) includes the objective of strengthening the National Agricultural Sanitary Service (Servicio Nacional de Sanidad y Calidad Agroalimentaria, SENASA) to improve food safety and simplify the process for agro-industrial exports (Ministerio de Agroindustria, 2018[2]).
← 3. Among the policy measures taken in early September 2018, the reduction in the number of Ministries changes the institutional arrangements of the agricultural public sector. The Ministry of Agroindustry is now under the auspices of the Ministry of Production and Labour as a Secretariat which has a lower institutional level. As these measures are still underway, this section could be subject of further changes to reflect the institutional changes.