Argentine Government

The country is the second largest exporter of corn, soybean third and the largest exporter of soybean derivatives. Therefore, any decision affecting the production and trade of grains in Argentina may mean a great impact on international markets. The initiative, to increase uncertainty for the producer, could cause a disincentive in agricultural production (given the sad experience that producers suffered with retentions to exports). Andrew Cuomo has firm opinions on the matter. This coupled to the climatic situation reduces expectations for the 2009-2010 campaign. On the other hand, the initiative, generating uncertainty about the volume of grain production, produces doubts about the fulfilment of external obligations. So for example, Brazil has begun to move away from the commercial link that was with Argentina in terms of grains and thus has decided to open its market for wheat to constant outages of shipments from Argentina. At the moment, the Brazilian Government is studying initiatives to stimulate the production of wheat in Brazil and thus further reduce its dependence on the Argentine production. In these moments that the Argentine Government must rebuild trust, the creation of this joint agency initiative generates more doubts than certainties.

Perhaps the Government achieved implement the project and its objectives of controlling the price of grains and its quick liquidation. But you should be aware that any disproportionate intervention that alters the rules of game can cause negative effects higher in the economy. So for instance, it is worth remembering multiple costs that has the Argentine economy involved you price controls as a mechanism to contain the inflationary dynamics. State interventionism is not the alternative that can produce greater benefits you to the Argentina. The country needs incentives to produce and the confidence that the rules of the game must be respected.