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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
Argentina
The Government of Argentina continues its involvement in market promotion through public/private sector partnerships for trade fairs and trade missions, as well as providing market information. The chief government-assisted programs include PROMEX (Non-Traditional Agricultural Exporters' Program), PROCAR (the Beef Export Promotion Program of the Argentine Secretary of Agriculture) and Export-AR (A Foreign Ministry program to encourage exports by small firms). Together, promotion funding for these programs was $7 million for 1996. Approximately $2 million was spent on direct promotional activities with the remainder on administration and other costs such as maintaining overseas offices, training and some travel expenses. Major markets for export promotions are in Southeast Asia, Europe and the United States. This year, Argentina is forging a new strategy to capitalize on increased consumer interest in wholesome foods by promoting its products as "natural". That is, showcasing the natural goodness and health aspects of its products. Argentina has developed the marketing theme "Argentine Food-A Natural Choice" which it is now using in most of its promotional activities. Information on private sector funding is not available.
Argentine Export Promotion:
PROMEX, a branch of the Argentine Secretariat of Agriculture, was created in March 1992 with the purpose of increasing Argentina's exports of non-traditional agricultural products in foreign markets such as fish, spices, fruits and vegetables, flowers and animal products by offsetting travel costs (up to 50 percent of per diem and tickets), attendance in international fairs (the government purchases space and allocates it to exhibitors), and providing market information. Other things being equal, small industries receive priority. This program has received loans from the World Bank and the Interamerican Develpoment Bank during the 1992-1997 term, but the program period has expired, and PROMEX is currently funded directly by the Argentine government until additional international money is secured. Funds are allocated to those industry groups or individuals who express interest and pass a competitive cost/benefit evaluation based on international market information and in-house research. The program is administered by a private/public sector committee, chaired by the Secretariat of Agriculture, and supported by a staff of 12 people in Buenos Aires.
PROCAR, the Beef Export Promotion Program of the Argentine Secretary of Agriculture, was created in 1993, with the objective of expanding Argentine beef exports through the opening of new markets, strengthening old ones, product diversification, and the launching of new products by emphasizing their natural, excellent quality. It receives funds from the Argentine Government and a loan from the Inter-American Development Bank, and is administered by the Secretariat of Agriculture. Its operation and procedures are similar to PROMEX. PROCAR works in two main channels: a) an Information System, which publishes Argentine export statistics, lists of cattle prices in different regions, lists of beef importers, market briefs, etc.; and b) the organization of trade missions/fairs to different parts of the world such as (based on 1997's activity schedule): Green Week in Berlin, Foodex in Japan, Internorga in Hamburg, National Restaurant Association in Chicago, Food Moscow, Stand Hotel Saudi Arabia, Hofex 97 in Hong Kong, Fancy Food in New York, ANUGA in Germany and the American Meat Institute Exposition in Chicago. Apart from this, PROCAR has financed a promotional campaign in Germany, the largest market for Argentine beef, which has been affected by the BSE crisis. PROCAR encouraged specialized German journalists to get acquainted with the Argentina’s beef industry.
The Ministry of Foreign Relations funds and administers EXPORT-AR, a program to promote Argentine exports from small- and medium-size companies. The services that Export-AR provides to exporters include the following: a listing of commercial opportunities, a Mercosur report, market briefs, lists of foreign buyers, export opportunities, foreign trade assessments, foreign trade data, and participation in shows, fairs and trade missions. There are 36 Export-AR offices throughout Argentina, with market database links to 120 diplomatic offices overseas, as well as 6 Export-AR offices covering the United States, Europe and Brazil. Agriculture-related events during 1997 include officially sponsored pavilions (15 fairs, of which 5 are in the U.S.), stands (5 total fairs, of which 3 are in the U.S.) and commercial trade missions (15 markets, of which 2 went to the U.S.). According to staff, the priority markets for this program are Asia and Brazil. The key marketing tools used by this program are trade fairs, trade missions, training seminars, and national exporters meetings. At trade shows, Export-AR only purchases space for exhibiters, and does not provide assistance for travel, lodging or per diem.
Although the government of Argentina does not use direct export subsidies to subsidize its agricultural exports, it does administer a form of transportation subsidy to promote investment in the poor and desert-like region of Patagonia. However, the total amount of this subsidy is unknown.
The government of Argentina also offers credit lines for production, export pre-finance, and trade fair participation. Interest costs of government-offered loans are not subsidized. Other credit lines encourage the production of forest plantations. Information on program levels for export financing are not available
Argentine oilseeds and hides exports are taxed to encourage domestic processing (oilseeds at 3.5% and hides at 10% ). All products exported (with the exception of those going to Mercosur members) benefit from tax rebates. Rebates vary from 1.5 to 15 percent. The total value of these rebates also is not available.
Competitor Activity:
Argentina traditionally has not been a significant target for market promotion activities for food products by foreign countries. However, with the opening of the market in recent years and development of regional trade opportunities resulting from Mercosur, promotional activities by foreign countries are rising. Argentina has one of the highest GDP's in South America at nearly $9,000 per year, and the economy is projected to grow by six percent in 1997. The food distribution sector is modernizing rapidly which is allowing greater introduction of imported food products.
The most active countries with market promotion organized by government or quasi-government organizations are several of the members of the European Union. Spain is the most active, followed by France, Italy, and Germany. Other countries include Canada and Argentina's fellow members or associate members of Mercosur, mainly Brazil, Uruguay and Chile. However, promotion by the Mercosur countries tend to be more carried out by the private sector, in part because they are closer and less in need of centrally organized activities.
Trade missions and supermarket promotions are tools used by some competitors, particularly Spain, France and Germany. However, trade show participation is the most common and effective mechanism being used for introducing and expanding the presence of imported foods in Argentina. During 1996 France, Spain and the United States put on solo trade shows. In August 1997 a new international show called SIAL Mercosur Food and Beverage Exposition was organized in Buenos Aires. This was a major show with over 500 exhibiters from 21 countries and more than 17,000 visitors. By accounts of both exhibitors and visitors, this show was very successful in providing an opportunity to promote their products and develop business contacts. The success of this show is indicative of how dramatically the situation has changed in Argentina and Mercosur regarding trade in food and beverage products.
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