Argentina: Import barriers are triggering fears of a looming shortage

BUENOS AIRES, ARGENTINA – Raul has been in the auto parts business in Argentina for over 25 years. He has lived through many economic crises in a country notorious for its seemingly continuous meltdowns. But he says what Argentina is experiencing now is unprecedented.

Emile is not alone.

Business leaders across Argentina are scrambling, trying to deal with a new series of import restrictions at a time when the government is trying to hold precious few hard currency reserves. The government is making it difficult to buy products from abroad and complicating the lives of companies trying to maintain a stockpile of supplies, which some warn could lead to shortages.

“Given the problems that exist today, you don’t have to be a genius to realize there will be problems sooner or later,” said Amell, who heads Ventalum, a manufacturer of aluminum auto parts with 180 employees.

Juan Pablo Ravazzano, who heads the Argentine Chamber of Animal Feeding Companies (CAENA), is one of several entrepreneurs in Argentina who are counting the days until he says the shortages will begin to become a reality.

“If it continues like this, we will have a shortage of raw materials in 45 to 60 days,” including amino acids, vitamins and minerals needed to manufacture feed and pet food, Raffazano warned.

Import restrictions are nothing new in Argentina, a country that has long suffered from a chronic hard-currency shortage, which has only worsened in recent months as pressure on the local peso has risen amid rising inflation and rising energy import costs.

However, the government of President Alberto Fernandez has tightened the screws on imports recently as it struggles to meet central bank reserve requirements that are part of a recent deal with the International Monetary Fund to restructure $44 billion in debt.

Increased import controls were one of Martin Guzman’s last official actions before he resigned as Economy Minister on July 2 as tensions within the ruling coalition erupted into the open.

His successor, Silvina Patakis, has pledged to continue with the government’s economic plan while facing many challenges, including trying to tame one of the world’s highest inflation rates of more than 60 percent, while the peso continues to slide in finances. The market is amid strict capital controls.

“The central bank doesn’t have dollars. It doesn’t have them now because it has an unsustainable exchange rate system,” said Marcelo Elizondo, an economic analyst who specializes in international trade and runs the consultancy DNI.

Argentines are so distrustful of their currency that they save in dollars but the government has imposed severe restrictions on access to the US currency. The official exchange rate is about half the cost of obtaining dollars through operations in the financial market.

“The restrictions are basically a way to prevent an increase in the exchange rate so as not to affect the inflation rate,” Elizondo said. “It is clear that the economy is severely affected.”

This means that companies must rely on the central bank for permission to purchase supplies essential to their operation.

“The central bank has the power to decide who will import and who will not … and this is not normal,” said Daniel Rosato, president of Rosato, which makes toilet paper and paper towels in Buenos Aires province. “If this is not resolved quickly, it will lead to shortages, productivity problems, and companies will have to shut down due to lack of supplies.”

The government has vehemently denied that shortages are a widespread problem even while recognizing that there may be cases where some products are difficult to obtain.

“There may be isolated cases of products missing from some shelves,” presidential spokeswoman Gabriella Cerruti said Thursday at a news conference. “But there are no huge cases of missing products anywhere nor any circumstance that would lead us to think…of shortages.”

Business leaders often find import blocks particularly frustrating because they can prevent manufacturers from operating at full capacity and generating the kind of dollars and jobs the country needs.

Alejandro Bartalini, owner of Metalcrom, which makes parts for farms and oil, said. “Today we are operating at 80, 90% of our production capacity.”

Emile, who runs the auto parts company, says that “the sad thing about this situation is that the demand is there” and the sector exports the majority of its production.

“We thought this year we would grow by 20%, but now there is a big question mark because of these restrictions,” he said. “This is a supply crisis, not a demand crisis.”

Martin Cabrales, Vice President of Coffee Cabrales, says he has never seen this level of import restrictions in the more than 20 years that he has been involved in the family business that has long relied on buying materials from abroad because Argentina is not coffee. Producer.

“The dangerous thing here is that they limit the use of raw materials, coffee is a raw material,” he said. “We believe the government needs to prioritize raw materials so that manufacturing does not stop.”

With its limitations, Cabrales says, the government has failed to take into account global market dynamics as it provides quotas to access the official dollar market based on what the company imported last year in dollars. But the international price of coffee has doubled in the past year and a half.

Cabrales is optimistic that the issue will eventually be “resolved”, “but in the meantime there may be a shortage”.

Amid concerns about supplies, some are trying to see the positive side of the restrictions.

With the price of imported salmon, the most popular fish for sushi here, having nearly doubled recently, Sergio Asatto, owner of Japanese restaurant Sushi Izkaya, said, it is a perfect opportunity for Argentines to expand their tastes.

“We try to help people learn about all the species that are found in the Argentine sea,” Asatu said. “This is an opportunity, if there is no salmon we can start working on advertising for other species.”

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