The Vicentin Agroindustrial Group has been the subject of debate within Argentina and the world. The complicated case of the agroindustrial giant has brought to the forefront the nature of Argentina’s agricultural sector that thrives on financial speculation and hoarding, the resistance of the country’s elite to act in favor of national interests, and the barriers facing President Alberto Fernández’s government in its efforts to implement more structural economic changes. So why should the Argentine government take over Vicentin?
Vicentin has taken out 1.35 billion USD in loans with international banks and the National Bank of Argentina which is currently the main creditor of the agro-exporting firm. Argentina’s largest public bank, under the direction of González Fraga, granted Vicentin loans of 18.1 billion pesos (approximately 255 million USD).
Among the 72 loans, granted under the former right-wing government, 28 of them, which account for a total amount of 5.7 billion pesos (813 million USD approximately), were approved during the final weeks of the government in office. In this moment, the company was also already defaulting on its payments.
In addition to these irregularities, which already prompted an investigation, there is also the fact that the company was the main funder of former president Mauricio Macri’s electoral campaign in 2019.
With its situation of debt, where the main creditor is the national bank in addition to 2,648 other creditors claiming debts of 99.4 billion USD, President Alberto Fernández announced that the state would intervene in Vicentin and presented a bill for the expropriation of the company.
Gabriel Delgado, an economist and specialist in the agricultural sector, was appointed as the auditor for Vicentin. Due to the early presence of auditors in the company, they managed to get hold of the documents from March 2017.
The national government’s move sparked the anger of the certain economic groups in the country and a cohesive opposition in transforming the Vicentin issue into a new conflict between Argentina’s large-landowning elite and the government, echoing the 2008 crisis over Declaration 125. These groups quickly activated their media influence networks and on social networks called for a mobilization against the nationalization of Vicentin, which they attended with the national flag.
After the pressure from the media and large business groups, President Alberto Fernández cooled down the debate and the story has been left with an open end.
What is Vicentin?
Vicentin S.A.I.C is a company from one of Argentina’s key economic sectors: the processing of soybean and cereals and the export of their by-products. It is number six in the agro-exporters ranking list, according to the Rosario Stock Exchange. In 2019, Vicentin was the number one exporter of oils and by-products.
Vicentin is responsible for 3% of Argentina’s total exports, and 10% of the total export of grains. It is a central exporting giant for Argentina’s economic backbone and encompasses several activities, with a focus on production.
Vicentin also has a dark past. During the last civic-military dictatorship in Argentina, Oscar “Cacho” Zarza, who was the leader of the Trade Union of Oil and Cotton Ginning Workers of General Obligado and San Justo of Vicentin, was kidnapped on January 30, 1976 inside Vicentin’s factory. “They arrested me inside, they gave me an arrest warrant typed with Vicentin’s typewriter and one of those who presented himself as a witness was Sapo Vicentin, who was one of the foremen,” Cacho recalled, in an interview with Página 12.
Its ties to the last dictatorship do not end there. In 1982, Vicentin was nationalized due to private debt, according to the denouncement of the Argentine League for Human Rights. At the time, Vicentin had requested 1,958,000 USD that the Argentine state paid.
Why is its expropriation important?
The company is strategically important from a macroeconomic point of view: the national government would incorporate a new source of foreign currency that can serve to ensure the stability of exchange rate. On the other hand, the nationalization of Vicentin is a first step on the road to food sovereignty, a vital part of food supply.
In 2019, the export of Argentine goods generated a foreign exchange income of 68 billion USD. Nearly 50% of the amount entered the oil and cereal sector, where Vicentin was the sixth company that exported the most, with a 9% share of about 2.6 billion USD.
Vicentin can serve as a token company with which the state can put a floor under the price of exports and combat the triangulation of commercial operations abroad. This triangulation developed by large exporting groups involves invoicing the goods to one destination, but sending the goods to another, using trader companies based in low or no-tax jurisdictions.
In this way, the national government would use information from one of the sectors where speculation often takes place, given the ability to withhold and not sell off the dollars received from exports.
Vicentin can also transform the current production model. A model that is based on large exploiters of natural resources, who hoard the profits abroad and leave only the crumbs to be distributed in the country.
Instead, small and medium-sized local enterprises can replace the production of large companies on a smaller, local scale, which generates the same or more work, but under different conditions and with better distribution of the natural wealth of our land and water.
A successful example of the same is the production of vegetables and fruits in the horticultural belt of La Plata, where the small producers of family farming produce 70% of what is consumed in the country’s large urban centers.