This past week, Argentina elected a libertarian president, economist Javier Milei, who promises to reduce the size of government and replace the nation’s currency with the U.S. dollar.
Argentina is the third-largest economy in Latin America, but decades of economic mismanagement have resulted in repeated crises, soaring inflation rates, debt defaults, and a booming black market for dollars. The recent statistics are stark: as many as 40% of Argentinians live in poverty, bank credit is nearly non-existent with 78% interest rates, and inflation is currently over 140%, with JP Morgan estimating it will reach as high as 210% by the end of 2023.
The Argentinian economy teeters on a recession, with wages worth less and consumers needing to use their savings to pay for basic necessities. Milei has vowed to close Argentina’s central bank and has shown support for dollarization, which means Argentina would stop using its peso and instead use the U.S. dollar.
The new president has promised to cut bloated government and reduce wasteful spending. He has blamed the central bank for rampant money printing leading to the crippling inflation. During his campaign, he said he would slash state spending and ditch about 10 government ministries.
In one of his first interviews on Monday after the election, Milei warned that it would take up to two years to tame inflation and laid out his plans to reform the state. Milei said, “Everything that can be in the hands of the private sector is going to be in the hands of the private sector,” including the state oil company YPF and state media.
Milei takes office on December 10, and on the first business day since his election, November 21 (Tuesday), the Argentine stock market reacted with optimism, up 14% overall, and the YPF state oil company’s shares up over 34% on this news.
The election of Milei also has the agricultural market reacting with optimism as the new administration’s approach and policy changes are expected to bolster production and exports. Argentina is one of the world’s top exporters of soy, corn, wheat, and beef. However, its grains and livestock producers have struggled with taxes and caps that they blame for hampering grain and meat exports for years. Adding to these challenges, in 2022 and 2023, the nation’s important grain production was severely constrained by crippling dry weather conditions, with eight heat waves and the worst drought in 60 years.
The professional pest control industry in Argentina is not immune to the harsh economic realities there. Syngenta has recently exited this market segment and there is a sizeable gray/black market for professional pest control.
“The currency volatility plays an important role in the professional pest control market because raw materials are acquired in USD by chemical suppliers, but pest control operators negotiate in the local Argentinian currency, ARS,” says Laura Mahecha, Kline’s Director of Agrochemicals. “Large distributors have the capacity to deal in both currencies, but smaller distributors deal mostly in ARS, which makes them more susceptible to economic fluctuations.”
Kline is currently conducting primary research on this market and will publish a report with market estimates and forecasts later this year. Kline’s Professional Pest Management Argentina study provides market insights, sales by pest, supplier, brand, active ingredient, product form, and five-year sales forecasts. For more information, please contact us.