Argentina: Market distortions are not gratuitous in terms of productivity

In Argentina there are three mechanisms to isolate domestic prices from international food values: export duties, export intervention, and "exchange withholdings." However, the Secretary of Domestic Trade, Roberto Feletti, has just announced - as if nothing of the kind happened - that "if we want to ensure meat, chicken, bread and milk we have to decouple domestic prices from international ones." With regard to the dairy sector, last September, according to the latest official data available (Inale), the average value of milk received by Uruguayan dairy farmers was 0.36 u $ s / liter. In Argentina, on the other hand, the national average price of milk in September was 33.0 $ / liter, which, measured in real dollars –converted with the MEP GD30 exchange rate– represented a figure of 0.18 u $ s / liter. If we take the average reference value of corn available in Montevideo in September (250 u $ s / ton), then it is possible to see that, on average, 695 liters of milk were needed to ...