There has not yet been a formal call from the Government, but The businessmen are already preparing for the fight. They believe that the negotiations -possibly from the first week of February- will be very rough. Perhaps tougher than the last ones, despite the fact that inflationary expectations have been cooling down.
The main food and beverage manufacturers They intend to open the discussion for the continuity of “Fair Prices“, the main program that Sergio Massa launched since he took office in August last year.
Massa has already said that he will look for the continuity of this plan for four more months, at least until the end of winter.
The executives admit that this plan will continue, since it is about the replacement of “Precios Cuidados”, the program created by Kirchnerism and which remained in force during the government of Mauricio Macri.
Unlike “Precios Cuidados”, the new “Precios Justos” has two conditions: a basket of 1,900 products with frozen prices until the end of February. On the other hand, it was agreed that around 20,000 essential items sold in large supermarket chains cannot increase more than 4% per month.
Now, businessmen object to both conditions.
Fair Prices, a key Massa program to consolidate the inflationary slowdown.
Fair Prices: the controversial arguments on both sides
Business owners want products that have maintained their values since November to come out of that freeze. They consider that in the inflationary context is unfeasible to sustain this strategy. Even if it is a very small basket.
The Government managed that this sample of 1,900 articles be with the “own brands” of the supermarkets, and that these commercial channels are the ones that negotiate with different suppliers. This is what officials will raise again when negotiations resume.
The most important fight, however, is going to take place around items that do not have “frozen” prices but have a cap of 4% monthly increase..
For businessmen, that maximum is unfeasible.
They mention that in some items they do not cover the increases in raw materials, which implies selling at a loss. There are sectors under the magnifying glass: in the sector of beverages, wines, beers and soft drinks.
In the case of wines, there were frosts in the Cuyo area before the end of the year that increased the raw material well beyond 4%.
Fair Prices: businessmen do not want to continue with the freeze.
There are also problems with the canned goods sector. Whether legumes or vegetables. Due to the drought, the prices of raw materials overheated, in line with the significant drop in production.
Simultaneously, some manufacturers that used to offset declines in local production with higher importsNow they cannot do it due to the obstacles that the Government imposes on purchases abroad.
In soft drinks, the rise in the price of sweeteners and packaging is argued.
The “detours” of some companies
Some manufacturers do it, especially small and medium-sized ones: they put a cap your deliveries in supermarkets and they divert most of their production to other commercial channels (wholesalers, supermarkets, warehouses).
In this way, they avoid being “trapped” by the conditions imposed on them by supermarkets, which in turn are conditioned by the agreements with the Ministry of Domestic Trade.
This condition goes from the mentioned maximum of 4% monthly increase to the number of days it takes to pay the bills, which sometimes extends more than 90 days.
Food manufacturing companies condition the continuity of the Fair Prices program.
Not all companies can use this maneuver: some are forced to maintain their sales scheme to be able to face fixed costs. In other words, they cannot supplant with the smaller commercial channel what they sell to the big chains because it is not enough for them to finance their costs.
The equation is very tight and they must do the math well. Some entrepreneurs meet more often with their financial managers than with those responsible for the commercial part.
Inflation: Massa’s strategy
For the Minister of Economy, the launch of “Fair Prices” meant improve inflation expectations in the most sensitive area of all: the food.
In fact, since the show launched, food prices have risen the least. They fell behind the average in the past two months.
Of course the meat, whose price has remained stable in recent times, helped stability. According to the Eco Go consultancy, food increased an average of 4% in December. But if it were not for the stability of meat, the “food” index would have risen 4.8%.
Meat “weights” 26% of the food category measured by INDEC and 9% of the entire CPI.
The success of the inflationary strategy, the Government’s key objective in the election year.
For that very reason, Massa does not want to take risks: he is going to speed up the extension of the agreements.
To that end, it will once again promise companies that they will have access to the “official” dollars to be able to import your supplies without problems.
That commitment, which is already in full force, has been half fulfilled, say the businessmen. On the one hand, it is true that the terms for accessing foreign currency have been shortened, but they are still not allowed to advance purchases abroad.
Just as Massa takes care of internal prices, he also takes maximum care of the dollars from the Central Bank. It is the narrow margin that the economy has to move without falling into a crisis.
