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Chicken and Flour Subsidies End in Argentina

10 January 2012, at 9:01am

ANALYSIS – On 31 December 2011, the government of Argentina stopped paying subsidies to the poultry and flour milling industries – subsidies intended to keep prices at an acceptable level – writes Chris Wright, senior editor of ThePoultrySite.

The subsidies to the Argentine agribusiness sector started in 2007, with the justification that they were trying to break internal food prices away from the rising international costs of feedstuffs.

The government created the National Office of Commercial Agribusiness Control (ONCCA) to run the subsidy programme.

The government subsidized wheat for the flour mills in order to contain bread prices; corn for chicken and pig producers as well as feedlots; and sunflower for the oilseed crushers. Small grain and pig producers also received subsidies.

Between 2007 and February 2011, when ONCCA was dissolved, the state gave out 10.5 billion pesos in compensation, half of which went to the poultry industry and the flour millers, reported Nosis.

The broiler and flour sectors were the only two sectors that kept receiving subsidies in 2011, even though the payments got very far behind, partially because the management of this program changed hands between government departments.

'Chicken for Everyone'

While the impact on the price of chicken has yet to be determined, some estimates say that it will rise by 14 per cent. Producers feel they have no choice but to raise prices.

The government worked out a deal with broiler and flour producers to maintain lower prices of these foods delivered to certain strategic places, such as the Buenos Aires Central Market. In exchange, these sectors will be able to raise their prices elsewhere.

The government was also working on a new plan called 'Chicken for Everyone' where 10 trucks will sell chicken at low prices in certain under-served neighborhoods in Buenos Aires, the Central Market and certain parts of the rest of the country. This strategy has been used before successfully with other products in Argentina.