✍l Fernando Vilella
Some economists propose a special regime that promotes investments with permanent rules of the game in fiscal, regulatory and trade matters, generating free trade areas to boost exports and investments and to get out of foreign debt for good, but they do so only by focusing on the energy potential of Vaca Muerta.
State policies on energy, investment facilitation and employment generation are relevant and essential, although they must be combined with other territorial development strategies that have similar economic and social needs in order to generate genuine work and roots, as well as truly competitive exports, which is what we will call Vaca Viva, a figure that represents the entire bioeconomy, not just livestock.
Vaca Muerta, like all oil and gas (also coal), is the product of ancient photosynthesis millions of years ago accumulated in sediments of plants and micro-organisms undergoing various physical and chemical processes.
Investments in these energies are highly concentrated, coming from multinationals (in Argentina also YPF). Oil, gas and coal are the technological expression of the 19th and 20th centuries, impossible to sustain for long due to their role in Global Climate Change, as they represent a model of linear consumption in retreat.
I use the figure of Vaca Viva, as a synonym for Bioeconomy, which brings together all the agro-industrial chains producing food of plant and animal origin, bioproducts, energy and fibres, all based on current photosynthesis, capturing atmospheric CO2, the main cause of the "greenhouse effect".
As logistics are often expensive, the value added to this biomass, mainly achieved by adding knowledge, must be in situ, thus generating local and sustainable development. Investors are mostly of national origin, many of them SMEs, so it is assumed that most of the profits stay in the country.
Let us look at examples of investments and their repercussions. Argentina shares the podium of maize and soya exports with the USA and Brazil, but exports more than 60 % of maize as grain, while Brazil exports 30 % and the USA 17 %. In the case of soya in Argentina, although the grain is processed into meal and oil, it exports more than 94 % of the meal produced, compared to 46% and 29% in Brazil and the USA. Our exports are for others to produce animal protein, as these inputs are mostly not for direct human consumption.
The meat on the grill
However, we are going through the best historical moment for exporting animal protein due to dietary changes, with global per capita consumption growing from 29 to 55 kilos since 1960, while the population doubled (from 3 to 7.4 billion people) and total production increased from 87 to 430 million tonnes of meat.
Hundreds of millions of rural poor have been transformed into urban middle classes by incorporating more meat into their diets. Added to this is a "black swan" that will modulate the market for a long time to come, African swine fever in China and its neighbours. China had 50% of the world's pigs last year and today it has lost almost half of them. This year it is losing production of 20 million tonnes in a world meat market of around 29 million.
Argentina produced some 3 million tonnes of beef 50 years ago and currently 2.30 million tonnes of poultry and only 700,000 tonnes of pork.
Why doesn't animal production grow more if feed (maize plus soya meal) is 70 % of the cost? Basically because the required investments are not being made.
According to the plan of the Meat Board, with investments in the order of 6 billion dollars, exports could reach 10 billion dollars a year in just 5 years, generating 200,000 jobs. In pigs alone, doubling current production in 3 years would require an investment of 1.9 billion dollars, generating exports of 1.6 billion dollars a year and 15,000 jobs.
Another example to give more life to the Vaca Viva is the forestry-industrial activity, where Argentina has a deficit in the trade balance of 700 million dollars a year, despite having record growth rates of planted trees, a very important suitable surface area and forests that are already waiting to be cut, again the problem is the lack of investment. With investments of 7 billion dollars by 2030, including industrial plants producing paper or CLT panels suitable for the latest generation of environmentally friendly constructions, a trade surplus of at least 2.5 billion dollars a year would be achieved, generating 187,000 jobs.
These are just a few examples of the Vaca Viva Viva, we will also find similar opportunities in each chain we analyse. AgTech, grains, fruits, vegetables, differentiated honey, seeds, alfalfa, wines, ready-to-eat products, bioinputs, bioplastics, bioenergy, biomaterials for construction, specialties, pet food, cultivation, harvesting and grading machinery, professional services, among others.
In all cases, in order to export, we are limited by supply, not by demand, as was historically the case. Reversing this requires scientific/technological knowledge, which we have (unfortunately it often has to migrate) and the lack of a legal-institutional framework to stimulate and ensure medium- and long-term investments linked to external markets.
There is more than US$300 billion Argentinean dollars outside the system, and worldwide
many billions of dollars placed at negative rates; all would have a chance if a good bill is finally passed in Congress, providing incentives and security for the promotion of both Vaca Muerta and Vaca Viva Viva.
There is no reason, since no resources are being requested, why the treatment and promotion given to investments in one should be different from those in the other; the promotions must inevitably be symmetrical. We are talking about new investments and instruments that do not reduce tax revenues, but with a major impact in the near future on the territories and exports, all consistent with the environmental commitments signed by Argentina.
Let's start building a different and stimulating future. These concepts of territorial equity must be considered and incorporated into the law of the two Cows by the authorities and legislators of the provinces, especially those who depend on the Viva, avoiding a rift between the two, as both are necessary and complementary.
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🤔 Did you know that Argentina has one of the most efficient photosynthetic watersheds in the world and the lowest carbon footprint on our planet?
Did you know that our possibilities for growth, development, wealth generation (the only genuine way to alleviate poverty), are enormous?
🧐📚 As citizens we must inform ourselves, look to the future to build it, and not allow ourselves to be sold narratives, divisions and false choices.
As we say in Plan País: let's replace the "or" with the "and" and both with the "how".*
Let's not do like party politics, let's add rather than subtract:
🐄 Vaca Viva + Vaca Muerta
Together we will take our country forward!
#PlanCountryArgentina
#YoQuierounPlanparaMiPaís
#NewArgentina
#VacaViva
* Replace "or" with "and", and both with "how".
If you enter the word "Bioeconomy" (or any other topic you are looking for) in the search engine of our site, you will find a lot of information, posts and webinars, such as:
📌 Webinar Bioeconomy with Fernando Vilella, Mayco Mansilla and Clara Lacau
📌 Without water there is nothing