What do a toilet paper manufacturer, a veterinarian, a coffee shop owner and a sushi chef in Argentina have in common? The dollar or, rather, the headaches they suffer to get it.
The shortage of dollars is a long-standing problem in the country and is associated with the distrust of Argentines in their own currency due to successive crises, especially in periods of accelerated inflation and political instability such as the current one.
In order to preserve purchasing power, citizens save in that currency, while companies and investors dollarize their profits. The problem is that now there are not dollars for everyone.
With restrictions already in place to buy dollars for savings or travel, the Central Bank in June limited the use of foreign currency for imports, a measure that is hurting the industry, causing product shortages and price increases that dangerously push the country into a triple-digit annual inflation.
Daniel Rosato manufactures toilet and kitchen paper in a plant located in a southern suburb of Buenos Aires and in which 140 employees work. Its production is affected by difficulties in importing cellulose, which was already scarce due to the war in Ukraine.
The background is the fight between President Alberto Fernández and his powerful vice president and former president Cristina Fernández de Kirchner (2007-2015) over the direction of the economy.
This dispute led to the resignation of the area minister, Martín Guzmán, close to the president, and his replacement by Silvina Batakis, a heterodox economist closer to the interventionist vision of Fernández de Kirchner.
In practice, the Central Bank regulates Argentina’s foreign trade, since it decides, according to invoicing criteria and the importance of the input, among others, how many dollars it releases to importers and in what period.
Importers who access these bills pay 130 pesos per dollar. If they do not have the approval of the monetary authority, they are forced to resort to the so-called counted dollar with liquidation, a legal mechanism by which they can make foreign currency through the purchase of shares or debt securities.
The problem is its price: 300 pesos per unit. This difference makes the input more expensive, reduces production and, as a domino effect, causes supply problems.
Coffee is another raw material that Argentina imports entirely, with an average consumption of one kilo per capita per year. 70% of Argentines have coffee for breakfast.
“Coffee… has risen 120% in the last year and a half. By giving us quotas in dollars, we buy less coffee for the same dollars,” explained Martín Cabrales, vice president of the family business Café Cabrales.
Juan Pablo Ravazzano, president of the Argentine Chamber of Animal Nutrition Companies (CAENA), said that for two weeks it has not been possible to import “micro ingredients” -vitamins, minerals and amino acids, among others- essential in the diet of animals.
CAENA announced that in less than a month there will be a lack of food for pets in veterinarians and that in the longer term it will cause an increase in animal mortality.
Analysts predict that an acceleration of inflation in July will be inevitable, among other reasons, due to the impact of restrictions on imports. June inflation was 5.3% and accumulates almost 36.2% so far this year.
The family metallurgical company Metalcrom produces parts for agricultural machinery and the oil sector with imported steel bars and valves. A supplier in Italy has already warned him that he is not willing to wait for 180 days, the deadline that the Central Bank set to release the dollars.
“There is no supplier in the world that lends to Argentina for 180 days,” said its owner, Alejandro Bartalini, 61 years old.
As in so many other economic crises throughout its history, Argentines resort to ingenuity to stay afloat.
Chef Sergio Asato, of Japanese descent, owns the Social Sushi Izakaya restaurant, specializing in sushi. Salmon, a fundamental ingredient of the menu, is mainly imported from Chile and in the last week its price increased 100%.
As it is impossible to transfer that cost to the final price and fearing the closure of the restaurant, Asato and other gastronomists agreed to offer sushi with varieties of local fish such as sea bass, trout, pejerrey and mackerel, among others.
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