Imports from Argentina are at risk for lack of dollars

Will you run out of coffee? And the salami for the ‘sting’? In the midst of the currency crisis due to the scarcity of dollars, with a strong reduction in international reserves and growing difficulties in imports, Argentines are wondering if their daily habits are at risk.

In order not to disappoint any of its customers, the importer who sells specialty coffee to Agustina Román for her ‘Tres’ coffee shop in Buenos Aires, this time brought only five bags instead of the usual ten.

“I don’t think we’re going to have a shortage of supplies, but we’ll have to be more careful with the raw material so that all businesses can be supplied”, reflected Román, warning that the import crisis in Argentina happens in the middle of winter, when demand for coffee increases between 20% and 30%.

Argentina does not produce coffee, it only imports. Buenos Aires coffee shops are an institution and part of the city’s identity. There is even a list of “notable cafes”.

That’s why this product illustrates a situation that extends to other goods.

Salami, an essential ingredient of the traditional sting that is shared at family gatherings or among friends, is, on the other hand, a national product.

But to do so, up to 25 imported components are needed, including casings and preservatives, according to the Chamber of Slaughtered People, which warned about the decrease in the stock of these products.

And everything conspires against imports in Argentina: the increase in international prices and freight costs, as well as the drop in the availability of dollars in the country.

The government maintains tight control of the exchange rate in the face of the erosion of its international reserves.

Dollars are missing, pesos are left

For Fernando Furci, general manager of the Chamber of Importers, the main problem has to do with distortions in the exchange market.

“In Argentina, there is a difference of more than 100% between the official exchange rate and that of the parallel market. It could be offset with more exports or other measures, but we don’t have them,” he explained.

Argentina’s gross reserves are around US$ 37 billion, but analysts estimate that net reserves (after discounting a swap with China and bank reserves, among others) are already in a negative balance.

“Dollars are missing, pesos are left over, and that leads to the current situation,” said Furci.

In June, imports from Argentina totaled US$ 8.5 billion, compared to exports of US$ 8.4 billion, which generated a negative trade balance of US$ 115 million.

With the early arrival of winter, the purchase of fuels and lubricants for US$ 1.9 billion, an interannual increase of 118.9% in prices and 19.6% in volume, weighed especially on this balance, according to Indec (Instituto de Statistics).

As a result, in the midst of an intense political and economic crisis, import requirements have increased and some import payment terms have been extended.

Imports to Argentina are made at the official exchange rate, through currency quotas assigned by the Central Bank to companies, based on purchases invoiced in previous years.

The mechanism does not take into account merchandise volumes, so these assigned dollar amounts may force a reduction in purchase volumes if prices are higher.

With this mechanism in place, in the case of coffee, with the increase in international prices of the grain, importers have to reduce their purchase volumes, explained Román.

The constant devaluation of the currency and excessive inflation, projected at 90% for this year, made the price of coffee go up a lot.

Regarding imports in general, the prospects are also uncertain for industries.

Furci concludes that “the problem is not only that of finished products, but also the critical factor that represents the inability to be supplied with the necessary predictability of inputs and raw materials, capital goods, spare parts, parts and pieces to maintain the competitive productive machine” in the country.