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Argentina Spurs Wine Exports with Preferential Exchange Rate
Kind: ICD What's New  Organization: Department of International Cooperation  Publish Date: 2023-03-27 16:30
In 2022, Argentina launched a special "soy dollar" exchange rate to allow farmers to sell soya beans at a premium rate of more pesos to the dollar compared with the official rate. Recently, Argentinian Minister of Economy Sergio Massa announced that a similar measure called "Malbec dollar" would be introduced from April 1, 2023, to boost wine exports. It aims to help wine producers increase their market competitiveness and deal with a high inflation rate and extreme weather conditions. The details of the policy will be announced in a few weeks, and it might be applied to other local agricultural products in the future.

The Argentinian government has approved a US$40 million loan from the Inter-American Development Bank (IDB) to help domestic wine producers with their business. Another US$10 million from the government will jointly assist to improve the wine industry's production sustainability, reinforce the technological capabilities of small and medium-sized winemakers, and enhance water use efficiency, including improvement of irrigation systems across different vineyard areas in Mendoza.

Under the National Agricultural Emergency Law, the Argentinian government has also committed to providing aid funding of 583 million pesos (US$2.93 million) for thousands of farmers whose crops were affected by frost, hail, drought, heat, and other extreme climate factors. An agreement is expected to be signed with the United States to eliminate restrictions on Argentinian grape juice exported to the U.S.

Mario Gonzalez, new chairman of Argentina Viticulture Corporation, has called for the government to exempt wine and grape juice from customs duty in order to strengthen their competitiveness in the global market as 40% of grapes produced in Argentina are for exportation. Gonzalez also suggested reducing the tax burden on employers. According to some research, a 100-hectare vineyard requires about 72 workers, while a soybean field of the same size only requires two workers.

Argentina plays an important role in the wine industry, with the fifth-largest wine production and seventh-largest market in the world. There are about 215,000 hectares of vineyards across 14 provinces, and Mendoza is the largest one accounting for 70% of the country's total production. Wine-drinking at mealtimes and festivals is popular in Argentina, and average per capita consumption is about 22.5 liters per year. In 2021, Argentina exported US$844 million worth of wine, for year-on-year growth of 12.4%. The main export markets included the U.S. (29.4%), the U.K. (11.8%), Brazil (11.3%), and Canada (7.5%). There are promotion activities in North America every year to establish the reputation of Argentinian wine and its brands.

Sources: Economic Division, Taipei Economic and Cultural Office in Argentina; Financial Times; Wines of Argentina blog

Update: 2020-04-23
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