Agricultural Policy Monitoring and Evaluation 2022

4. Argentina

Support to agriculture

Support to producers in Argentina has been negative since the beginning of the 2000s, reflecting export taxes that depress domestic prices received by producers. The limited payments producers receive focus on input support, provided mainly in the form of credit at preferential rates.

Fluctuations in support are driven by changes in export tax rates and by unstable macroeconomic conditions such as the steep depreciation of the Argentine peso since 2018. The most extreme negative value in the level of support was -51.1% of gross farm receipts in 2008, falling to -10.3% in 2017 and to ‑18.3% in 2019-21. Negative market price support has been the main component of the Producer Support Estimate (PSE). As a result, 99% of policy transfers were most-distorting in 2019-21. The ratio of producer to border price (NPC) reached 0.84 in 2019-21, making producers’ prices on average 16% below world market prices.

Soybeans are the main export, with the highest export tax rate and the most negative Single Commodity Transfers (SCT), representing 45% of commodity gross farm receipts. Several grains and livestock products also have negative SCTs, while price support and SCTs are positive for pig meat and eggs.

First buyers of agricultural commodities benefit from lower farm-gate prices. Mirroring the negative PSE, consumers enjoy a positive Consumer Support Estimate of 20.5% of expenditure at farm-gate prices.

Support to general services (GSSE) relative to the value of agricultural production slightly decreased from 0.6% in 2000-02 to 0.5% in 2019-21 – lower than the OECD average. Expenditure on agricultural innovation systems represents the biggest component. Agricultural production and exports grew dynamically in the last two decades due to an innovative private sector and support by public services, particularly for knowledge, research and extension, and sanitary inspection.

Most of Argentina’s budgetary support to agriculture targets GSSE rather than individual producers. Total budgetary support to farmers and the sector overall (TBSE) was 0.1% of GDP, well below the absolute value of negative market price support, making the total support estimate to agriculture (TSE) also negative throughout the period covered: -1.1% of GDP in 2000-02 and -1.9% in 2019-21.

Recent policy changes

Export taxes were eliminated in December 2021 for several products, including peanuts, popcorn maize, seeds, prepared fruits and vegetables, oatmeal, rye, chickpeas, lentils, beans, pearled or crushed oatmeal, potato flakes, potato and cassava starch, and organic products. However, they remain for key products such as soybeans and beef. Until 2022, the government adjusted export tax rates by discretionary decree using a special authorisation from Congress based on “economic emergency” considerations. These special executive powers expired on 1 January 2022 because the 2022 Budget Law was not approved in Congress.

In August 2021, Congress passed a new Biofuels Law that reduces the mandated biodiesel blend rate from 10% to 5% and authorises the Energy Secretariat to reduce the rate to a minimum of 3% and to reduce the blending rate of maize in bio-ethanol. These reductions might affect investment in biofuels up to the expiration date of the new law in December 2030.

SENASA, the agency leading plant and animal health and food safety, took several decisions related to the pig meat sector. It created the National Animal Health and Welfare Commissions for Swine and other animal species as bodies for sharing and exchanging information and collecting the demands, opinions and proposals of stakeholders and other public agencies in the animal health decision-making process. A new regulation for swine production plants to be officially recognised as “free of disease” defines procedures that follow the World Organization for Animal Health (OIE) standards on compartmentalisation. Following African Swine Fever (ASF) outbreaks in the Dominican Republic and Haiti, SENASA declared a sanitary alert in November 2021 covering the entire Argentine territory and adopting and strengthening prevention measures to reduce the risk of entry.

Assessment and recommendations

• Given agriculture’s high share of greenhouse gas (GHG) emissions (30%), Argentina’s commitment to reduce national emissions by 19% in 2030 relative to 2007 may require specific mitigation targets for the agricultural sector and measures to achieve those targets.

• Actions proposed in the Nationally Determined Contributions (NDCs) for the agriculture and livestock sector are welcome, such as the promotion of sustainable and resilient practices, prevention and climatic risk transfer, and research and capacity building. The NDC implementation plans under development, including for deforestation, should be concrete and monitored.

• The recent inventory of GHG emissions from agriculture is valuable to support the design, implementation and monitoring of mitigation policies. Initiatives to better estimate the carbon footprint, such as recently for wine, can create awareness and capacity to implement and monitor mitigation practices from farm level all along the value chain. Research projects such as those implemented by the National Institute for Agricultural Technology (INTA) can contribute to the adoption of mitigation practices.

• Taxes and other restrictions on agriculture exports should be phased out in line with an economy-wide tax system and would enhance policy certainty with alternative sources of fiscal revenue. Unpredictable export restrictions create negative incentives for long-term investments and reduce global food security. Agricultural policy could be better anchored in a broad long-term policy framework, moving towards more neutral, stable, predictable and targeted policies.

• The Argentina Against Hunger plan provides monthly financial support to consumers through an electronic card. Such consumer support through social policies is more effective than trade measures that depress domestic prices of primary commodities that represent only a small share of food expenditures. The programme proved to be useful in providing food assistance to vulnerable populations in the context of the COVID-19 pandemic. However, these programmes should target the population most in need and require monitoring of implementation.

• To deliver research, extension and other public goods for agricultural innovation, and thereby increase productivity growth (which averaged only 0.3% in the last decade), Argentina needs to develop systematic monitoring of efforts and results in R&D and innovation, and define and implement strategic priorities. Innovation policy should focus on public goods in areas where the private sector has difficulty to deliver, such as those related to sustainability and less-developed value chains, or for regional economies outside the Pampas region. Improving the environmental performance of agriculture will also require enhanced monitoring and information systems for better policy design.

• The Special Tobacco Fund (FET), with a budget near that of the National Institute for Agricultural Technology (INTA), should be reformed. Output payments to tobacco producers are inefficient for social objectives and should be phased out. The resources could be used to diversify poor tobacco-producing areas through investment in human and physical capital or for targeted social policies. Such reform should include monitoring and evaluation of initiatives implemented by the provinces.

Figure 4.1. Argentina: Development of support to agriculture

 

 

 

 

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

 

Note: The producer price change and the border price change are not calculated when the negative price gap occurs at the commodity level for the current or previous year.

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Table 4.1. Argentina: Estimates of support to agriculture

Million USD

	2000-02	2019-21	2019	2020	2021p
Total value of production (at farm gate)	17 022	46 894	41 266	43 830	55 587
of which: share of MPS commodities (%)	85.72	84.70	83.60	85.30	85.19
Total value of consumption (at farm gate)	7 998	32 058	26 863	31 967	37 344
Producer Support Estimate (PSE)	-1 035	-8 996	-11 760	-4 614	-10 614
Support based on commodity output	-1 069	-9 103	-11 873	-4 702	-10 736
Market Price Support1	-1 131	-9 192	-11 952	-4 864	-10 760
Positive Market Price Support	150	294	257	205	419
Negative Market Price Support	-1 280	-9 486	-12 209	-5 069	-11 179
Payments based on output	62	89	79	163	24
Payments based on input use	34	104	110	85	118
Based on variable input use	2	6	2	6	11
with input constraints	0	0	0	0	0
Based on fixed capital formation	23	76	84	59	85
with input constraints	0	0	0	0	0
Based on on-farm services	8	22	24	20	23
with input constraints	0	0	0	0	0
Payments based on current A/An/R/I, production required	0	3	3	2	3
Based on Receipts / Income	0	0	0	0	0
Based on Area planted / Animal numbers	0	3	3	2	3
with input constraints	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	0	0	0	0
With variable payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
With fixed payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
Payments based on non-commodity criteria	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0
Percentage PSE (%)	-11.86	-18.27	-28.37	-10.47	-19.05
Producer NPC (coeff.)	0.89	0.84	0.77	0.90	0.83
Producer NAC (coeff.)	0.89	0.85	0.78	0.91	0.84
General Services Support Estimate (GSSE)	116	262	292	264	230
Agricultural knowledge and innovation system	66	146	168	150	120
Inspection and control	33	83	93	80	75
Development and maintenance of infrastructure	17	31	30	31	33
Marketing and promotion	0	2	1	3	1
Cost of public stockholding	0	0	0	0	0
Miscellaneous	0	0	0	0	0
Percentage GSSE (% of TSE)	..	..	..	..	..
Consumer Support Estimate (CSE)	456	6 838	8 377	4 138	8 000
Transfers to producers from consumers	483	7 218	8 935	4 025	8 694
Other transfers from consumers	-6	106	-2	313	7
Transfers to consumers from taxpayers	0	0	0	0	0
Excess feed cost	-21	-486	-556	-201	-701
Percentage CSE (%)	12.59	20.51	31.18	12.94	21.42
Consumer NPC (coeff.)	0.88	0.82	0.75	0.88	0.81
Consumer NAC (coeff.)	0.89	0.83	0.76	0.89	0.82
Total Support Estimate (TSE)	-919	-8 734	-11 468	-4 351	-10 385
Transfers from consumers	-477	-7 324	-8 933	-4 339	-8 701
Transfers from taxpayers	-436	-1 516	-2 532	-325	-1 691
Budget revenues	-6	106	-2	313	7
Percentage TSE (% of GDP)	-1.07	-1.95	-2.58	-1.14	-2.12
Total Budgetary Support Estimate (TBSE)	212	458	484	513	375
Percentage TBSE (% of GDP)	0.10	0.10	0.11	0.13	0.08
GDP deflator (2000-02=100)	100	6 863	4 483	6 272	9 833
Exchange rate (national currency per USD)	1.70	71.32	48.23	70.64	95.08

.. Not available

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Argentina are: wheat, maize, soybean, sunflower, fruit and vegetables, milk, beef and veal, pig meat, poultry and eggs.

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Description of policy developments

Overview of policy trends

For many decades, Argentina’s agricultural policies alternated between free trade and import substitution under different economic policy frameworks (OECD, 2019[1]). Argentina liberalised trade in the late 1970s and explored ways to increase trade with its neighbours and other economies from the second half of the 1980s. The Argentine economy became more integrated in international trade, including the liberalisation of the agro-food sector, in the 1990s, in particular through the creation of MERCOSUR1 in 1991 and the 1994 WTO Agreement.

After the financial crisis in 2001, Argentina increased tariffs, established price controls and re-introduced export taxes on agricultural products such as soybeans in order to raise revenue and reduce basic food prices. Further export restrictions in the form of quotas for wheat, maize, milk, and beef were imposed in 2008, introducing uncertainty in transactions. Between 2007 and 2011, a consumer price subsidy was implemented. The National Office of Agricultural Commercial Control (ONCCA) agency provided payments to processors purchasing wheat, maize, soybeans, and sunflower products from the local market.

In 2015, the government reduced export taxes on soybeans and soybean oil, and eliminated export taxes on all other agricultural products. The government also eliminated all export quotas and free-floated the exchange rate of the Argentine peso to other currencies.

However, with the 2018-19 peso depreciation and the subsequent economic recession, export taxes were re-established not only for agro-food products but for all goods. The change of government in December 2019 resulted in an agricultural policy shift. Agricultural specific export taxes that had been eliminated or reduced in December 2015 were re-instated for most products in early 2020, while exchange-rate controls introduced in the beginning of 2020 resulted in a widening gap between the legal (so-called official) exchange rate and the other market exchange rates.

While historically agricultural trade policies and their effect on farm prices have been alternating between trade liberalising and restrictive policies, long lasting agricultural institutions created since the 1950s remain relevant to the sector’s development. For instance, the National Institute of Agricultural Technology (INTA), created in the mid-1950s, continues to provide general services to research and extension. The long-established animal and plant health institutes were merged into SENASA in 1996. In the private sector, innovative service providers to farmers were created, such as AACREA in 1960 and AAPRESID in 1989 (Table 4.2).

Table 4.2. Argentina: Agricultural policy trends

Period	Framework	Changes in agricultural policies
Prior to 1990	Alternate free trade and import substitution policies	Price interventions on main agricultural products, mandatory public stockholding, export taxes on agricultural trade, tariffs on imports of agricultural inputs such as fertiliser, low levels of investment in private agricultural R&D and infrastructure in general Several attempts to liberalise trade Creation of agricultural R&D and extension services institute INTA (1956); private institutions such as AACREA (1960) and AAPRESID (1989) created to provide services to farmers
1991-2001	Shifts to open the economy	Dismantling stockholding and price-setting public institutions, reduction of import and export tariffs, free trade agreements (Mercosur and WTO) Price stabilisation, reduction of barriers to trade, privatisation and deregulation of markets Dissolution of National Commercial Boards (1991) Creation of animal and plant health and food safety SENASA (1996) Creation of the seed regulatory institution INASE (1991)
2002-2015	Return to a closed economy	Implementation of export taxes, import restrictions, value chains subject to regulations as export quotas and price controls at the retail level The National Office of Agricultural Commercial Control (ONCCA) dismantled (2011)
2015-2017	Gradual shifts to open up the economy	Elimination of export taxes for all agricultural commodities, except reduced taxes on soybean exports Elimination and reforms to the Register of Export Operations ROEs (2015) Federal Agricultural Council (CFA) reformed (2017)
2018-	Reintroduction of export taxes	Export taxes established for all exports including agriculture in response to the economic crisis of 2018 Reintroduction of specific taxes on agricultural products and exchange rate controls since 2019

Prior to the economic crisis of 2001, producer support fluctuated around zero. With the reintroduction of export taxes and other trade restrictions after the 2001-02 financial crisis, the PSE turned negative due to substantial negative market price support and absence of any significant budgetary support to farmers. Negative producer support peaked with price spikes in world markets in 2008, reaching ‑51.6% of gross farm receipts. The reduction in export taxes in 2015 resulted in reductions of the negative support. While market price support continued to be negative, budgetary support to farmers remained limited and mainly in the form of subsidies for tobacco (Figure 4.4). Around 60% of total expenditures on agriculture in the last ten years financed general services to the sector. From 2007 to 2010, Argentina provided subsidies to food processors (primary consumers), to compensate for high prices of agricultural products.

 

Notes: A/An/R/I:Area planted/Animal numbers/Receipts/Income.

Payments not requiring production include Payments based on non-current A/An/R/I (production not required) and Payment based on non-commodity criteria. Other payments include Payments based on non-current A/An/R/I (production required) and Miscellaneous payments.

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Main policy instruments

In contrast to most countries covered by this report, producers of Argentina's main agricultural products are implicitly taxed through negative price support. Export taxes are by far the most important market intervention and the major source of policy-driven transfers away from the agricultural sector in agricultural markets in Argentina. The Ministry of Finance designs and implements these export taxes whose rates are adjusted by decree. Additionally, quantitative export restrictions on maize, wheat and beef meat are implemented by the Ministry of Agriculture, Livestock and Fisheries. All these measures have had and continue to have major impacts by depressing domestic prices below international reference prices and creating negative transfers to producers.

To a limited extent, Argentina provides input subsidies, mostly in the form of implicit interest rate subsidies through preferential credit provided by Fund for the Financing of the Agricultural Sector (FINAGRO). These credits finance investment and working capital in the production of a range of commodities. The fund FONDAGRO created by the government in 2017 also finances investment in the sector at preferential interest rates, but its scope is limited. There are almost no other forms of budgetary support to Argentine producers. Small amounts of direct payments are provided as disaster assistance in response to extreme weather events, mainly droughts. There are no national direct payments for agri-environmental services, and few at provincial level. The Agricultural Provincial Services Programme (PROSAP), financed with loans by the Inter-American Development Bank (IADB) and managed by the Ministry of Agriculture, Livestock and Fisheries, invests mainly in large-scale agricultural irrigation infrastructure. Law 25080 on Forest Promotion provides grants and tax benefits to forest producers since 1998. Since 2019, an additional payment is paid to those enterprises that have forest certification (FSC and CERFOAR-PEFC) and implement environmental practices or enrichment of the native forest.

The Argentine legal framework on intellectual property rights on seeds dates from 1973, and was modified by later resolutions. Although the legislation considers no constraint on “own use” of seeds in Argentina, the INASE establishes certain requirements for the farmers’ rights or own use. This is particularly relevant for self-pollinating crops such as soybeans, wheat, cotton and rice, where seeds used by farmers are not produced by hybridisation, and farmers do not pay royalties for those. The National Institute for Seeds (INASE) sets conditions for farmers to benefit from this exemption and monitors its implementation. There is also a private extended royalty system under which farmers pay for certain varieties of seeds.

The Special Tobacco Fund (Fondo Especial del Tabaco - FET) provides a supplementary payment to market prices and other support to tobacco producers. Created in 1972, FET provides additional revenue to tobacco producers in the northern provinces of Jujuy, Salta, Misiones, Tucuman, Corrientes, Chaco and Catamarca. The fund is mainly financed by a tax of 7% on tobacco retail prices (excluding VAT) and directly managed by the Ministry of Agriculture, Livestock and Fisheries. The federal government transfers 80% of collected funds to tobacco producing provinces proportional to their share of production. After the signature of the WTO agreement in 1994, Argentina committed to reduce this support as part of its Aggregate Measurement of Support (AMS) commitment. FET payments to tobacco producers shrank to USD 75 million, with the rest of the funds spent on technical assistance, to invest in local infrastructure, and to provide social and health assistance.

Most expenditure finances general services to the sector such as the agricultural knowledge and innovation system, or inspection control services. 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.

Agri-environmental regulations are mostly decided at provincial level. Córdoba province has a Law of Good Agricultural Practices setting standards for sustainable agricultural production. This was the first regulation at a provincial level and is part of a Good Agricultural Practices Program launched by the Province in 2017. Compliance with the programme gives farmers access to lump-sum payments, with an annual budget of ARS 180 million (USD 2.9 million) in 2020. In 2021, the province of Santa Fe also started a Good Agricultural Practices Program. The province of Entre Ríos enacted a Law on Soil Conservation in December 2018. The new standard declares mandatory soil conservation for any area with soil degradation. Farmers are subject to mandatory conservation and management practices on up to 15% of their production area. Compliance permits farmers temporary and partial exemptions from provincial rural property taxes. In the province of Buenos Aires, the BPA-Suelos Bonaerenses Program of 2020 supports extensive producers of crops to carry out crop rotation, practices reducing water and wind erosion, and develop a plan to reduce pesticide use.

The Biofuel Law, approved in 2006, established compulsory fuel blend mandates since 2010, starting at 5% and increasing to 10% for diesel and 12% for gasoline. The law was scheduled to end in May 2021, but in August 2021 the Argentine Congress passed a new Biofuels Law that reduces the mandated biodiesel blend rate from 10% to 5%.

Since 2016, Argentina is party to the International Treaty on Plant Genetic Resources for Food and Agriculture (ITPGRFA) for the conservation and sustainable use of all plant genetic resources for food and agriculture, following guidelines of the Convention on Biological Diversity. The National Advisory Committee on Genetic Resources for Food and Agriculture (CONARGEN) co-ordinates public agencies on biodiversity issues related to the sector. The Application Authority of the ITPGRFA is in the Ministry of Agriculture, Livestock and Fisheries, whereas the Political Focal Point is in the Ministry of Foreign Relations, International Trade and Cult. The Instituto Nacional de Tecnología Agropecuaria (INTA) is developing projects supported by the Benefit Sharing Fund of the ITPGRFA and the Global Crop Diversity Trust.

The National Forest Management Plan with Integrated Livestock (MBGI) is a joint plan created in 2015 by the Ministry of Environment and Sustainable Development, the Ministry of Agriculture and the INTA. The MBGI develops technical guidelines for native forest management and livestock management in the framework of the Native Forest Law. There are Forest Good Practice Manuals in different provinces and two certification schemes for forest management, the Forest Stewardship Council (FSC) and the Argentine Forest Certification System (CERFOAR- PEFC). Almost half of the cultivated forest area is under one of these schemes.

Since January 2020, the social programme “Argentina Against Hunger” has provided financial support for children, pregnant women and disabled people. Support is channelled through an electronic food card (ALIMENTAR Card) to be used in any food product store. The food card is given to parents with children under 6-years old who receive the Universal Allowance per Child (AUH), pregnant women who receive the Universal Pregnancy Allowance (AUE), and people with disabilities who receive the AUH. The programme reaches around 1.5 million adult beneficiaries and 2.8 million children every year. Beneficiaries receive between USD 50 and USD 100 per month, depending on the number of children in the family.

Climate change mitigation policies in agriculture

The agricultural sector contributes up to 30% of GHG emissions in Argentina. Argentina’s second NDC in the framework of the 2015 Paris Agreement on Climate Change was submitted in December 2020 and updated in October 2021. Argentina is committed to an absolute, economy-wide and unconditional net emission limit of 359 MtCO₂eq by 2030 – equivalent to a decrease of 19% compared to the peak reached in 2007. The tools Argentina employs to reach this goal are expansion of renewable energies (at least 30% of the total energy matrix will have to be from renewable sources by 2030), lower subsidies for fossil fuels, expanded protected areas, and improved efficiency in agriculture, industry, transport and construction. Argentina participates in the Global Methane Pledge initiative.

The National Plan for Agriculture and Climate Change is designed to comply with the objectives of the United Nations Framework Convention on Climate Change under the Paris Agreement. The plan includes mitigation and adaptation measures for the sector based on risk management. An inventory of greenhouse gases from agriculture, livestock and forestry plantations was completed to monitor and evaluate the sector’s emissions. As an important beef producer, Argentina faces a challenge measuring the linkages between the animal sector and GHG emissions to capture the differential impacts of grain-fed versus Argentina’s more predominant pasture-based cattle. Standard GHG inventories can underestimate the capacity of soils in grazing land to sequester carbon (Viglizzo et al., 2019[2]).

Argentina lost between 4 million and 8 million hectares of forest in the last 30 years; between 11% and 22% of its forest area in 1990. Deforestation rates decreased since 2007, estimated at 0.35% for 2014‑15. The main driver is agriculture. Conversion of forests to farmland and pastures contributed 35% of the total GHG emissions from agriculture in 2014 (OECD, 2019[1]; Sy et al., 2015[3]; Fehlenberg et al., 2017[4]). The 2007 National Law of Native Forests, the 2015 National Forest Management Plan with Integrated Livestock (MBGI) and the Law for the Promotion of Forests are efforts to ensure good practices and curb deforestation.

The National Institute for Viticulture (INV) participated in the elaboration of the Self-assessment Protocol for Wine Sustainability of Bodegas de Argentina as part of the Methodological Guide for the Estimation of the Carbon Footprint in Wine. This guide offers a methodology to inventory GHG emissions along the entire value chain related to the production of Argentine wine. An additional guide for producers focuses on practices for self-evaluation of social and environmental sustainability.

The National Institute of Agricultural Technology (INTA) plays an important role in research and innovation to reduce GHG emissions from agriculture. It has a portfolio of research projects related to climate change mitigation and adaptation.2 This includes: estimates of GHG emissions in agricultural systems; crop management and adaptation strategies of the systems to climate change; characterisation of the current climatic variability and vulnerability due to the effect of climate change; production strategies that increase carbon sequestration in the soil; management of native forests with integrated livestock; analysis of the dynamics of land use via optical remote sensing and radar; evaluation, monitoring and management of biodiversity in agricultural and forestry systems; monitoring of soil degradation; efficient use and management of water in irrigation systems; and survey of wetlands, sustainable production and use.

Domestic policy developments in 2021-22

In 2021, Argentina published the final results of the National Agricultural Census carried out in 2018 (CNA-18). The new census uses new technologies and innovative approaches to capture the scale of the structural transformations that have taken place in Argentine agriculture in recent decades. In particular, the diversity of new actors and service providers that play a crucial role without necessarily owning the land (Box 4.1). The information in the census can be valuable for improving policy making in Argentina.

Box 4.1. The new National Agricultural Census 2018 reveals far-reaching innovation and structural change

The publication of the final results of the CNA-18 in 2021 provides evidence of deep technological and organisational changes in Argentine agriculture. The previous agricultural census was carried out in 2008, but due to very low response rates it was not reliable for statistical analysis that had to be based on the 2002 census instead. CNA-18 is therefore an important source to provide a complete and exhaustive picture of the agricultural structures and the structural changes of the last two decades, filling significant information gaps. Technological change has driven new business models based on land rental and outsourcing of agricultural services. Agricultural activity has expanded from the Pampas (the core region) towards other regions, so-called regional economies, feedlots have also expanded and precision agriculture and livestock have spread.

The CNA-18 tried to measure the current complexity of the multiple activities related to land use including biofuels and other agro-industrial activities carried out on the farm, based on a diversity of technologies, business models, and profiles of agricultural producers. For that purpose, CNA-18 introduced conceptual innovations seeking to capture these structural changes, targeting not only agricultural production units but also companies that provide services, inputs, and technologies to agricultural producers that outsource several activities. The questionnaire included questions to capture the increasing outsourcing of key activities, and the use of new and complex productive technologies, including smart farming and digital technologies, and organic, biodynamic, and ecological practices.

The results reflect the great complexity and heterogeneity in the technological and productive profiles and functional organisation of agriculture. The agricultural production units range from basic and traditional production forms to complex business ventures that use sophisticated technology, in particular digital and biotechnology applications. The census also reflects the co-existence of family farming with companies that constitute production conglomerates supported by investment funds that provide financial resources. Additionally, the results show a very dynamic network of complementary companies, services and technology providers for the agricultural production units, which play a prominent role without land ownership.

Finally, the CNA-18 applied new digital technologies for data collection, consistency, and management processes, implying that the necessary time for the completion of the CNA-18 was reduced, and the quality of the information improved. The results are published by the National Institute of Statistics and Census.

Source: https://cna2018.indec.gob.ar/.

Production and marketing practices

In April 2021, the Ministry of Agriculture, the Ministry of Productive Development and the Ministry of Labor determined that from 1 January 2022 bovine meat for retail may only be marketed in units resulting from the division of half carcasses into pieces not exceeding 32 kg. The objective is to increase quality and health standards and market transparency. An adaptation period of three months up to one year was agreed for meat packing plants to implement the new marketing standard. A livestock commission for good livestock practices, production and environmental standards (Mesa de Trabajo Ambiental Permanente) was created by the Ministry of Agriculture.

Animal and plant health and safety

SENASA, the main agency in charge of plant and animal health and food safety, took several decisions in 2021 related to the pig meat sector. The creation of the National Animal Health and Welfare Commissions for Swine and other animal species3 aims to facilitate consultations with all stakeholders in the public animal health decision process and other public agencies. The National Service for Agri-Food Health and Quality established guidelines for swine production plants to be officially recognised as “free of diseases”. The recognition may be granted to those plants that comply with the standards of the World Organization for Animal Health (OIE) on compartmentalisation. The new regulation provides the necessary official guarantees for swine production according to the conditions required by importing countries, in relation to biosafety, traceability and health status. In November 2021, SENASA issued a national sanitary alert due to African Swine Fever (ASF) outbreaks in domestic pigs in the Dominican Republic and Haiti and its potential spread throughout the American continent. SENASA declared a sanitary alert throughout the Argentine territory. Existing prevention measures were strengthened in order to reduce the risk of entry, exposure and dissemination of the ASF virus.

SENASA also created the Programme for the Control of Residues and Contaminants in Products of Plant Origin Destined for Export within the scope of the General Coordination of Surveillance and Warning of Residues and Contaminants (COGVARC). The programme aims to establish a monitoring system, of sampling, analysis and diagnosis of residues and contaminants in products of plant origin destined for export.

Irrigation

The Ministry of Agriculture started a new Regional Plan for Irrigation Reservoirs in 2021. The plan includes a diagnosis of the situation of irrigation in San Juan and Mendoza and proposals for improvement in irrigation efficiency using water reservoirs for pressurised irrigation, promoting the construction and use of reservoirs for small and medium-sized producers. Other water deficit regions such as Patagonia are to be included in the next stage of the plan. The project is implemented by the Ministry of Agriculture, the Ministry of Economy, the Ministry of Productive Development and the Provincial Governments.

Biotechnology

The Argentine Agricultural Bio-inputs Program (PROBIAAR) was created in 2021 for small and medium-sized producers, to promote, encourage and strengthen the bio-inputs sector. The Argentine Bio-product Program modified the definition of bio-products with the objective to promote firms that innovate in biomaterials and bio-products. Three Argentine Bio-product labels were created: Argentine Bio-product Stamp Natwash, Argentine Bio-product Seal Bio-paints and Soltec Argentine Bio-product Seal. Additionally, three new initiatives from the Ministry of Agriculture promote bio-design, the local production of bioplastics, and, more generally, the emergence of local bio-developers.

Four genetically modified events were approved in 2021 in Argentina: glyphosate tolerant alfalfa, and three pest resistant and herbicide tolerant maize events.4

Risk Management

The Integral Risk Management Program (GIRSAR) aims to strengthen the resilience of the agro-industrial system, reducing the vulnerability and exposure of producers to climate and market risks, especially among the most vulnerable actors. During 2020 and 2021, the Loan Agreement signed with the International Bank for Reconstruction and Development (IBRD) included a new component called “Response to Contingency Emergencies” (CERC) to provide a tool to strengthen Argentina's capacity to respond to an emergency or natural disaster. The CERC is a contingent financing mechanism that will be structured as a new component of GIRSAR that allows rapid access to resources in the event of an emergency or natural disaster. The General Directorate of Sectoral and Special Programs (DIPROSE) is responsible for the operational management of the Program.

In the context of recovery from the COVID-19 pandemic, financing through the Central American Bank for Economic Integration (Banco Centroamericano de Integración Económica [BCIE]) was approved for the Program Post-Emergency Rural Recovery and Development in October 2021. The objective of the programme is to contribute to sustaining and consolidating agro-productive, agro-industrial and services activities that generate income and employment for the rural and semi-rural population. This programme will be implemented by the Secretariat of Food, Bioeconomy and Regional Development and is expected to begin in 2022.

In October 2020, the government declared a state of economic emergency for citrus production as a result of extreme climatic events and declining export markets. Over the course of one year, this allowed tax reductions and concessions to be provided to citrus producers in provinces of Entre Ríos, Corrientes, Misiones, Jujuy and Salta. In October 2021, the economic emergency was extended for another year and also extended to producers in the provinces of Buenos Aires, Catamarca and Tucumán.

Rural Development, family farms and indigenous agriculture

In August 2021, the Ministry of Agriculture created a special programme for the sustainability of small and medium agricultural firms (Programa de Sustentabilidad de Agropymes). The programme promotes the development, production, industrialisation, processing, commercialisation and distribution in the domestic market and for export of small and medium-scale agricultural and agro-industrial food and by-products. The Ministry of Agriculture approved 32 projects for the sustainable and productive development of small and medium producers. The projects will be developed with municipal governments, private capital companies, co-operatives, producers and educational institutions for a total amount of ARS 782 million (USD 8.2) and focuses on strengthening and improving livestock, fruit and vegetables, dairy and non-timber forest product production processes.

The PROTAAL programme was created in 2020 to promote family farming and local supply of food. In 2021 the programme distributed ARS 481 million (USD 5.1 million) to 1 167 beneficiary families. Several other sectoral and special programmes invested in rural infrastructure and family farming. In 2021, the Provincial Agricultural Services Program (PROSAP) completed three investment projects and approved four major projects. Also, two national projects were approved for strengthening the National Service for Agri-Food Health and Quality (SENASA) and the National Institute of Seeds (INASE).

In 2021, the Economic Insertion Program for Family Farmers in Northern Argentina (PROCANOR) approved 215 projects for ARS 1 111 million (USD 11.7 million) including 3 618 beneficiary families. The Program for the Promotion of Resilient and Sustainable Agri-food Systems for Family Farming (PROSAF) supports sustainable, inclusive production and marketing systems for peasants and family farmers. The programme is financed by the International Fund for Agricultural Development (IFAD) and the Development Bank FONPLATA. The executing agency is the Ministry of Agriculture, Livestock and Fisheries, through DIPROSE and the Secretariat of Family, Peasant and Indigenous Agriculture.

The Ministry of Agriculture, Livestock and Fisheries proposed that the Program for the Development of New Irrigation Areas in Argentina would redirect its resources towards loans on projects of rapid execution to improve the reactivation of production and boost regional economies after COVID‑19. The project financed by the Development Bank of Latin America (Banco de Desarrollo de America Latina, CAF), began in 2017 and changed its focus as reflected in the addendum to the loan agreement approved in November 2021. The aim of the project is to contribute to the development of regional economies and improve the competitiveness of the agro-industrial sector through improvements in rural infrastructure. DIPROSE is the implementing agency for the programme.

Biofuels

In August 2021, the Argentine Congress passed a new Biofuels Law, replacing the law which expired in May 2021. The new law reduces the mandated biodiesel blend rate from 10% to 5%, giving the Secretariat of Energy the authority to lower the blend rate further to a minimum of 3% if required by economic conditions. The new law mandates for bioethanol a blending rate of 12%, with the volume divided evenly between sugarcane and corn feedstock, with no change from the previous legislation. However, the Energy Secretariat now has the authority to reduce the volume coming from corn ethanol by up to half if necessary. This reduction of blending rates may have implications for the investment in the biofuels sector until the new law expires in December 2030.

Climate Change adaptation

In December 2021 the Smart Climate and Inclusive Agri-food Systems project was approved with a budget of USD 400 million financed by the World Bank.5 The general objectives of the project are related to adaptation and resilience. It will invest in coverage and quality of rural public infrastructure; promote the sustainability of small and medium agri-food producers and their organisations through climate smart practices; and support the reorientation of the National Institute of Agricultural Technology (INTA) towards climate issues. The implementing agency is the Ministry of Agriculture, Livestock and Fisheries, through the General Directorate of Sectoral and Special Programs and Projects (DIPROSE). The project is expected to begin in 2022.

Trade policy developments in 2021-22

In December 2021, export taxes on selected agricultural products, such as peanuts, popcorn maize, seeds, prepared fruits and vegetables, oatmeal, rye, chickpeas, lentils, beans, pearled or crushed oatmeal, potato flakes, potato and cassava starch and organic products, were eliminated. The total export value of the tariff positions included in this elimination reaches USD 920 million. Export taxes re-instated in 2020 remain for main commodities: 33% for soybean, 33% for soybean products, 5% for maize flour, 7% for wheat flour, 7% for sunflower grain and oil, 12% for maize and wheat, 5% for milk products and 9% for beef. Export taxes on other products from outside the Pampas region, such as wine, pears, apples, grapes and, cotton are 5%. The government adjusts export tax rates by decree using a special authorisation from Congress based on “economic emergency” considerations since 2020. However, in December 2021 the ruling coalition was not able to pass the 2022 Budget Law in Congress, and the special powers delegated to the executive expired on 1 January 2022. This may imply maintaining the existing export tax rates without modifications until a new budget law is passed.

Exchange-rate controls in place since 2019 have resulted in a widening gap between the legal (so called official) exchange rate and the other market exchange rate. Due to these controls, agricultural exports need to be settled at the official exchange rate; the widening gap between the official and market rate in 2021 implies an additional reduction in the price received by farmers.

Since January 2021 maize and wheat exporters are required to comply with administrative export permits that are granted by the Ministry of Agriculture, depending on the quantity available and the price in the domestic market. Export quotas were not officially set but export permit requirements were in place. However, total exports of wheat and maize in 2021 were higher than in 2020 as recorded by the Argentine statistical institute INDEC. On 17 December 2021, the Ministry of Agriculture, Livestock, and Fisheries established a framework regulating exports based on a “volume of equilibrium of exports” (VEE) and limiting export permits. Going forward, the Ministry announced it will publish the VEE for maize and wheat based on the government's projection of production, domestic consumption and stocks. Exporters will be able to request export declarations (DJVE) for up to 90% of the VEE. Once this limit is reached, additional export permits will only be granted within 30 days of the expected exporting date.

In February 2021,6 the government created a trust to subsidise domestic consumption of edible oils for a total amount of USD 190 million. The funds for the trust were provided by cereal exporters and exporting oil companies (CIARA-CEC) in function of their share in exports. In practical terms, the fund is financed by primary producers who receive an additional discount on the farm prices of soybeans, sunflower and maize. The trust provides subsidies to the 75% of total domestic consumption of edible oils (29 million litres/month). Plans for similar trusts are reportedly under consideration, including for users of wheat and maize, for the production of products such as wheat, pasta, and poultry.

In April 2021, the government imposed a stricter set of requirements for registering beef exports. In May 2021 beef exports were suspended for 30 days with the objective of limiting the domestic price increases. Since June 2021, the government banned the export of 12 categories of beef, mostly destined for domestic consumption.7 The cuts not covered by the export restriction were subject to administrative export permits and minimum export prices. Agreed export quotas with the European Union and the United States are not covered by the export ban.

The government also reduced export duties on organic products. As from 15 January 2022, export duties for agro-ecological, biological and organic products duly certified were eliminated, and were reduced by five percentage points for wheat, soybeans and maize certified as organic.

Contextual information

Argentina is an upper middle income country with a dynamic agricultural sector that has been making a growing contribution to the GDP, from 4.7% of the GDP in 2000 to 5.9% in 2020. In contrast, agriculture's share of employment is decreasing and is currently well below 1%, due to a high degree of mechanisation of the production in the Pampas region, the major agricultural region. The country is one of the world's largest agricultural exporters, and agro-food exports have been growing significantly in the last decades, representing 41% of total exports in 2000, and 61% in 2020. In contrast, agro-food imports represent only 9% of total imports.

Argentina has abundant agricultural land representing almost 4% of the total agricultural area of all countries covered in this report, with a large share of this area composed of pasture land. The share of livestock in the total value of production was 39% in 2020.

Table 4.3. Argentina: Contextual indicators

	Argentina		International comparison
	2000*	2020*	2000*	2020*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	428	942	1.1%	0.9%
Population (million)	37	45	0.9%	0.9%
Land area (thousand km2)	2 737	2 737	3.4%	3.3%
Agricultural area (AA) (thousand ha)	128 510	108 382	4.3%	3.7%
			All countries1
Population density (inhabitants/km2)	14	17	53	63
GDP per capita (USD in PPPs)	11 619	20 768	9,281	20,929
Trade as % of GDP	9	13	12.3	14.0
Agriculture in the economy			All countries1
Agriculture in GDP (%)	4.7	5.9	2.9	4.9
Agriculture share in employment (%)	0.7	0.1	-	-
Agro-food exports (% of total exports)	41.5	61.2	6.2	8.5
Agro-food imports (% of total imports)	5.4	9.0	5.5	7.7
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	59	61	-	-
Livestock in total agricultural production (%)	41	39	-	-
Share of arable land in AA (%)	22	30	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

The Argentine economy began to stall when the peso came under pressure in April 2018. The value of the peso vis-à-vis the USD was reduced by 40% in 2018, and by 70% in the period 2018-2021, and the economy plunged into recession and inducing annual inflation rates above 40%. Due to exchange rate controls, the electronic exchange market rate has diverged from the official rate. Adversely affected by COVID-19, GDP declined by 10% in 2020 but increased by 8% in 2021.

Argentina runs a significant agro-food trade surplus having exceeded USD 30 billion for most of the past decade. Most of agro-food exports (76%) are primary or processed products used as inputs in downstream industries abroad, whereas the much smaller bundle of agro-food imports is mostly composed of primary products for use by industry (59%).

 

Sources: OECD statistical databases; World Bank, WDI; and ILO estimates and projections.

 

 

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Argentine agricultural production has grown at an annual rate of 2.3% between 2010 and 2019, similar to the world average. Within this total growth, 1.7% was due to an increased use of intermediate inputs, while only a small portion of production growth (0.3%) was due to Total Factor Productivity (TFP) growth, that is, innovations and technical improvements in the way resources are used in production. The contribution of TFP to production growth is below the world average.

Agricultural nutrient balances in Argentina are below the OECD average. The shares of agriculture in energy use and in greenhouse gas (GHG) emissions are, at 6.1% and 30.6% respectively in 2020, well above the OECD average, with the high emissions reflecting the large number of ruminants.

 

Note: Primary factors comprise labour, land and capital (livestock and machinery). Intermediate input comprises materials (feed and fertiliser).

Source: USDA Economic Research Service Agricultural Productivity database.

Table 4.4. Argentina: Productivity and environmental indicators

	Argentina		International comparison
	1991-2000	2010-2019	1991-2000	2010-2019
			World
TFP annual growth rate (%)	2.1%	0.3%	1.7%	1.4%
			OECD average
Environmental indicators	2000*	2020*	2000*	2020*
Nitrogen balance, kg/ha	-1.4	3.1	32.1	30.0
Phosphorus balance, kg/ha	1.7	2.2	3.4	2.9
Agriculture share of total energy use (%)	5.8	6.1	1.7	2.0
Agriculture share of GHG emissions (%)	40.5	30.6	8.6	9.7
Share of irrigated land in AA (%)	..	2.2	-	-
Share of agriculture in water abstractions (%)	71.4	73.9	46.3	43.7
Water stress indicator	..	..	9.7	8.6

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

References

[4] Fehlenberg, V. et al. (2017), “The role of soybean production as an underlying driver of deforestation in the South American Chaco”, Global Environmental Change, Vol. 45, pp. 24-34, https://doi.org/10.1016/j.gloenvcha.2017.05.001.

[1] OECD (2019), Agricultural Policies in Argentina, OECD Food and Agricultural Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264311695-en.

[3] Sy, V. et al. (2015), “Land use patterns and related carbon losses following deforestation in South America”, Environmental Research Letters, Vol. 10/12, p. 124004, https://doi.org/10.1088/1748-9326/10/12/124004.

[2] Viglizzo, E. et al. (2019), “Reassessing the role of grazing lands in carbon-balance estimations: Meta-analysis and review”, Science of The Total Environment, Vol. 661, pp. 531-542, https://doi.org/10.1016/j.scitotenv.2019.01.130.

Notes

← 1.  Mercosur is a free trade agreement among South American countries including large agricultural exporters such as Argentina, Brazil, Paraguay, and Uruguay.

← 2.  https://inta.gob.ar/paginas/proyectos.

← 3.  https://www.boletinoficial.gob.ar/detalleAviso/primera/252097/20211101.

← 4.  https://www.argentina.gob.ar/agricultura/alimentos-y-bioeconomia/ogm-vegetal-eventos-con-autorizacion-comercial.

← 5.  https://www.boletinoficial.gob.ar/detalleAviso/primera/254164/20211210.

← 6.  https://www.boletinoficial.gob.ar/detalleAviso/primera/240536/20210208.

← 7.  https://www.boletinoficial.gob.ar/detalleAviso/primera/245930/20210623.