Argentine Beekeepers' Magazine

(Espacio Apícola, November 8th, 2022) The current political and economic crisis that the Argentine Republic is experiencing falls on the back of regional economies and beekeeping among them.

Adverse weather conditions for honey production until now in Argentina this year, the increase in the cost of living and inputs is added. During high profitable years producers improve their infrastructure and productive capacity. If they have a livestock farm they capitalize on cows, facilities, genetic improvement or more plots to increase production. In this market economy, who does not grow disappears. On the other hand, in bad years producers know that they have to sell part of their livetock, logically at lower prices than desired, to keep the wheel turning and to resist. They get rid of some heads and postpone projects.

The Argentine beekeeper has the same dynamic, in profitable years he changes vehicles, invests in technology, machinery, infrastructure and grows in number and quality of beehives. Just as the farmer's currency can be a silo where he collects the grain to sell it in a timely manner and cover current expenses, face unforeseen events or make an investment, the Argentine beekeeper does the same with honey. In general, he does not take credit and there is no adequate insurance for his production that can cover him in the event of a contingency. In bad years he resorts to his reserves (of honey), an administration as old and successful as the one implemented by Joseph in Ancient Egypt of the pharaohs narrated in the Torah, but in a series of bad or catastrophic years, the beekeeper begins to lose his capital. In order not to lose the track of the market economy in which this beekeeper lives, something similar happens to a company listed on the Standard and Poor, Dow Jones or Nasdaq index, trying to survive, lowering its share prices to achieve liquidity (cash) and cope with bad times.

In Argentina, with official annual inflation in the order of 100%, the export honey price paid to beekeepers in Argentine pesos increased less than 15% in more than one year, from March 2021 to August 2022. Even when the international payments for the honey were received in dollars by the Central Bank of Argentina with an improvement of more than 8%, as we analyzed in this page on October 7th.

The supply of the beekeeping inputs chain increased in dollars by more than 100% in that period. As an example, these days beekeepers have to guarantee the control of Varroa mite in their beehives. For this they can use different products. The kg of oxalic acid, an active ingredient authorized and widely distributed in Argentina, in June 2021, when it had already had an increase of 50% compared to the previous year, cost US$ 1.55 plus VAT, in September 2022 US$ 4.08 plus VAT. Those who use an excipient to dilute the active ingredient paid for it in 2021 US$ 1.86 per kg and in 2022 US$ 2.85 both values plus VAT and in 250 kg drums. The director of a national laboratory of veterinary products for beekeeping told us last August that the suppliers did not want to sell to him. Another similar impact had cardboard, which many use as a support for approved drugs such as oxalic acid or compounds with amitraz, went from US$ 1.44 to US$ 3.06 per kg of a 1.5mm thick gray cardboard thickness. We can talk about tires, spare parts for vehicles, or any other input necessary for the activity, from the wood of the hives to the forklift, some more than others, they increased around 100% in dollars.

As we have already said on this page these higher costs doubled in dollars and also fell on the marketing chain. The 8% improvement in the international price was not enough and the real relative price paid to the producer was reduced to absorb the higher costs of storage, freight, personnel, administration, quality analysis and dispatch. Added to the costs of facing trade sanctions such as the punitive rates for dumping recently applied in the United States against Argentine honey.

Inflation in the main centers of our honey consumption, the United States and Europe, is around 10% per year, close to the 8% improvement that the price of Argentine honey had on average between January and August of 2021 and January-August of 2022 in the United States. A container freight cost of Argentine honey to the United States or Europe increased significantly, reaching 10% of the value of the honey; these costs were and are paid by the buyer up to now, as well as the penalties for dumping.

For its part, the quotation of official dollar in Argentina increased by only 37% between March 2021 and June 2022 (one year and three months). On March 1st, 2021, the dollar cost $94.75 (Argentine pesos) in Argentina, while on June 20th, 2022 it cost $128.50. This fall in the official dollar with respect to inflation caused a direct increase in the marketing chain and a drop in the relative price of honey to producers about 60% minus. So much so, that the same international money transfer houses paid double or more than double the official price for each dollar or euro transferred to residents in Argentina. While the official price of the Euro on December 16th, 2021 was $115.48, an international transfer to a private individual paid $231.08 for each Euro. They paid 21% more than the official value of the euro plus the PAIS Tax and the withholding of the Income Tax that was then in force in Argentina for those who wanted to buy dollars or euros (Euro currency by card or to send foreign currency, as of December 16th, 2021 = $115 + 30% PAIS Tax + 35% advance payment of Income Tax = $189.75 while an international transfer by WU paid $231.08 by Euro).

In addition to the international increases of prices, this explains why all the inputs in Argentina skyrocketed in dollars because they were valued at a real market quotation and not at the exchange rate at which the National Government decides to pay exports.

This scenario is far from fighting the international price of honey, it strengthens it.

Faced with this situation, Argentine honey exporters pressure the market to increase the international honey prices, so that Argentine honey production does not fall and to pay this "Argentine cost". Therefore, in no way can it be understood as a dumping maneuver, quite the opposite.

On the other hand, while the US Government seeks to lower crude oil prices with increased production and by threatening oil companies with more taxes if they do not increase production, in Argentina, the National Government takes away 60% of the value of the exports of the regional economies with a disguised export duty. The result discourages regional productions such as honey and tends to reduce supply on the international market. This is not the only reason, but in fact, from 100,000 tons of honey or more that Argentina produced at the end of the 1990s, today it is 80,000 or less. In an international market that has grown in demand, Argentina has been offering less honey.

The Argentine Society of Beekeepers (SADA) sent to the Minister of Economy, the attorney Sergio Massa, a note on October 28th saying: "we ask you for a program that allows a preferential exchange rate for the payment of honey exports, not for a short period so that the measure can reach beekeepers. To expand and substantiate this request is that we urgently request a meeting, either personally or with the officials who are in charge of the issue." At the same time, they have asked the Secretary of Agriculture for a meeting to deal with this issue and others within the interest of SENASA. Lucas Martínez, president of SADA, informed us that the Secretary of Agriculture, Juan José Bahillo, will receive them next Wednesday, November 16th.