Crise De Vinhos Argentinos. Parte2

Today in english.

Uupdate: Foram os proprios eleitores de la que colocaram esse governo onde esta. As vezes a democracia nao funciona mesmo. Rivalidades idiotas de esportes de lado, da dó da Argentina e alguns paises da america do sul ultimamente. Espero que o pais onde moro nao entre nesse rol tao seleto tao em breve.

Argentine Wine Dragged Down By Red Tape

© AFP | Protestors bang cooking pans as they march against the government's economic policies

As a tough year for viticulturists draws to a close, Amanda Barnes takes stock.

Posted Monday, 26-Nov-2012

Public frustration with the economic policies of Argentine president Cristina Fernández de Kirchner is on the rise – as evidenced by a recent series of mass cacerolazos, or pot-banging protests. Yet while the wine industry is at the forefront of the discontent, few producers will speak on the record for fear of reprisals. What they describe under a cloak of anonymity is an industry ensnared by changing economic policies and hit by retaliatory action from abroad.

Chief among their complaints is a law introduced this year demanding that government licenses must be issued before any goods can be imported. Not surprisingly, the wine industry is significantly affected; it depends on foreign suppliers for more than 90 percent of its winemaking accessories – including ingredients, processing and bottling equipment, and oak barrels.

What's more, a shortage of government staff to process the license applications has caused havoc for wine producers, with delays stretching over six months or more as imported items sit idle – or waste away – at Customs.

One winery had its personalized corks held up for 10 months, forcing it to postpone bottling and sales for almost a year. Another winemaker has lost next year's contract to produce wine for an international brand because he wasn't allowed to import the requisite machinery for attaching specialized screw caps. As a result, 2012’s wine remains unbottled.

“It has been a nightmare,” said a third producer, who brings in wine from Chile to sell through his Argentine winery. “I can only just get it in through Customs now."
In addition – like other Argentine businesses – wineries report that some license applications are refused without explanation, throwing production and export plans into total disarray.

To make matters worse, the new licensing legislation was introduced at the most critical time of the year for winemakers – the beginning of the 2012 harvest season. Specialist wine-accessory importers suffered badly as trade ground to a halt, and some businesses collapsed. Suppliers abroad are perplexed. One company received a visit last month from its German suppliers, who wanted to see the situation for themselves. They returned home with nothing resolved.

And the chaos doesn't stop there. In 2011, the Argentine government introduced an informal trade-balancing policy, under which firms can import goods only if they export products of an equal U.S. dollar value. With the exception oftannins that are shipped abroad, Argentina does not make specialist wine accessories. So importers and producers have been forced to look for imaginative ways to meet the state's requirements.


Some have opted to buy import rights from export-oriented businesses working in other fields, who usually charge a hefty 10 percent commission. Naturally, this raises the price of the imported wine equipment. When combined with Argentina's astronomical inflation rate (the government puts it at 10 percent; unofficial estimates are three times that), the increased costs are potentially ruinous for wineries. Meanwhile, other New World producers are becoming increasingly competitive.

© Pulenta Estate | A Porsche Carrera parked in the cellar at the Pulenta Estate
Even before the latest regulations were introduced, wineries were using their export credits to import unusual products. Back in 1994, fast-car enthusiasts Eduardo and Hugo Pulenta from Pulenta Estate each wanted a Porsche. With few foreign car companies operating in Argentina, their only option was to import the vehicles themselves. Today, Pulenta runs a Porsche salesroom as a side business to its wine operation, which exports 80 percent of its 360,000-liter annual output. In a reverse of this situation, some car manufacturers, including Hyundai and BMW, use exports of wine and other agricultural goods to balance their imports.

Some Argentine wine companies have looked for local solutions. Matias Michelini, winemaker for Sophenia, Zorzal andPassionate Wines, wanted to start making wine in imported egg-shaped tanks. However, import fees of around $11,500 a tank made this too costly. Michelini called in local concrete producer Daniel Moreno, who came up with tanks that cost just one-third of the imported examples. Moreno is now selling them to other Argentine winemakers, too.
For the Argentine government, such an arrangement proves that the regulations are working. According to President Kirchner, the trade-balancing policy is a reaction to the global economic crisis in which there is a “real trade war between all major economies.” She explains that the new restrictive import policies “protect the domestic industry against all odds.”

But with enforcement of the new regulations being tightened, there have been worrying reports of heavy-handed behavior by officials. The Argentine media have reported cases of the national tax agency, the AFIP, using investigations as both a threat and a punishment against those who criticize the government. Hence the reluctance of the wine industry to speak out on the record.
A further source of frustration lies in Argentina's financial controls. Although wineries sell to international clients almost exclusively in U.S. dollars, no Argentine business is allowed to save in dollars. Instead, their income is converted into Argentine pesos – a currency that has little value either inside or outside the country. This is evident in the dollar’s black-market exchange rate, which is almost 50 percent higher than the official rate.


With the "dollar clamp" diminishing confidence in the economy, some in the wine industry are trying to safeguard their savings elsewhere for fear of another economic collapse.
One financial director admits that his winery – along with a handful of others – has created a triangle of companies abroad to sell wine at a lower rate to an intermediary country. The wine is then sold on to the export market, in dollars, at double the price. Half of the money goes back to the company in Argentina, while the rest is saved in a foreign bank account.

© Pulenta Estate | Pulenta's 135-hectare vineyard in Luján de Cuyo, Mendoza
Most Argentines are growing accustomed to the need to search for loopholes. But the wine industry fears that its current difficulties will both affect the country's position in the international market and reduce foreign investment.

Along with the struggles over imports, the Rural Land Law passed in late 2011 prohibits foreign investors from buying more than 1,000 hectares – barely bigger than a "boutique" vineyard in Argentina. In Mendoza, where private vineyard estates had blossomed over the past five years, foreigners are becoming wary of buying land, even if only a couple of hectares.
“People are still investing in Argentina – Argentina is still a great investment,” said the property manager of one private vineyard estate. "It is just that everyone is asking more questions now… They want to know if investment is safe.”
A flying winemaker, who wished to remain anonymous for fear of reprisals, said: "Argentina has great potential; it has the climate, conditions, experience and knowledge to make great wine. It is the unsteady politics that are ruining it."

There is also growing discontent among countries that import Argentine wines. In May, the U.S., Canada and Britain joined the European Union and 12 other countries in complaining to the World Trade Organization about Argentina's import policies.
In addition, America, the United Kingdom and Brazil have imposed retaliatory restrictions on Argentine wine and other products. As a result, in the year to September exports of packaged wine fell 6.3 percent, according to a Wines of Argentina report.
At 980 million liters a year, domestic consumption is not enough to sustain Argentine wine production at its current level (total output stands at 1.5 billion liters annually). While the quality of Argentine wine has improved in leaps and bounds over the past decade – leading to increased prestige worldwide – the industry still relies on bringing in much of its experience and knowledge from overseas through consultants and technology.
The greatest concern is that its hard-fought progress will be strangled by red tape.