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22-Nov-02
Argentine dairy industry one step from the abyss The Argentine dairy is submerged in a reality that will either end in complete success or in
the disappearance of this activity.On the one hand, the Argentine National Service of Food Health (Senasa) informed that in the past 10 months a total of 171,186 tons were exported with a value of $260 million (in
2001, 105,983 certified tons were exported), up 45% from last year. But on the other hand, Argentine Secretary of Production Anibal Fernandez warned that "if no changes are made in dairy production, when the season
peak appears, Argentina will end up importing milk." Almost 105 dairy establishments have closed as a consequence of the local economic crisis and the lower amount of available product did not cause any effect due to
the simultaneous drop in internal consumption. Facing this situation, the Departments of Production and Economy are analyzing a salvage plan that will allow a reversal in perspectives. If they fail, during the first
six months of 2003 dairy establishments may begin to import raw dairy products. Chronic deterioration In May of this year, the Argentina Association of Regional Partnerships for Agricultural
Experimentation (Aacrea) warned that four dairy producers were disappearing every day. Specialists spoke of "structural and interim" problems and also pointed out the progressive dedication to agricultural activities.
But why do dairy producers shut down if the perspective can seem so interesting? There are many old reasons that worsen as time goes by.
First of all, milk prices have producers as secondary actors. They count with a much reduced margin for negotiation, receive low prices and payments are extended over several months. To this must be added the high
amount of debt, over $150 million, and to close out the panorama: the temptation of soybean, an agricultural activity that requires smaller investments and has relatively assured profitability. In a report presented
by major organization INTA Rafaela, located in the heart of Argentina's top milk producing region, after the devaluation suffered during the beginning of 2002, a growing process of "agriculturization" was detected in
the area of the Santa Fe and Cordoba provinces. Only efficient establishments with higher technology could contrast part of the negative effects of the recent devaluation. "The facts indicate that dairy producers who
correctly applied technological packages reduced the negative impact of the recent economic issues. However, difficulties for remaining in the system increase and the process of agriculturization is a reality that
seriously affects the dairy production in the region," pointed out the analysis, to later add, "So much debt and lack of credit to produce technological changes in the most inefficient dairy producers facilitate the
change of productive activities or an increase of diversification, which would assuredly affect the dairy activity," diagnosed the INTA specialists. Any
agriculturist can decide during the beginning of each campaign if he will cultivate wheat, soybean or corn. If things don't go right, next year he has the possibility of trying other combinations and strategies. In
dairy production, no such thing exists. Closing an establishment with these qualities represents, most of the time, throwing away years of genetics and labor capital and a reduction of employees. All of this without
counting the danger of a shortage of supplies.Now what? It isn't new that Argentine dairy production needs a change, the creation of a series of measures, and clear and equal rules without
seriously damaging any part of the milk chain. The process of deterioration requires a solid will to change in order to modify a potential negative outcome. The Argentine Department of Production expressed the
existence of decisions that still must be defined but basically include the elimination of withholdings to exportations, a suspension of the VAT tax and a refinancing of debt. If the application of measures is
postponed until next year, it may find Argentina as a part of an incredible paradox: one of the richest dairy producers in the world will be forced to import milk. E-campo.com
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