Past, Present, & Future Report
The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein.
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Table of Contents
- Canada - Argentina Relations
- Agricultural Trade
- Consumer Market
- Access Issues
- Agriculture Sector & Policies
- Contact Information
- Key Resources
Argentina, home to 40 million people, is the third largest country with respect to population and the second largest country with respect to land in South America. Strategically located between the South Atlantic and the South Pacific Oceans, the country contains diverse geophysical landscapes filled with rich natural resources, a substantial agricultural sector, and a diversified industrial base. With the largest economy in South America, Argentina presents significant opportunity for Canadian investors and exporters.
Canada and Argentina have a positive relationship that is reinforced by numerous trade agreements, such as the Foreign Investment Promotion and Protection Agreement (FIPA) and the Canada-Mercosur Trade and Investment Cooperation Arrangement (TICA). There are potential opportunities for Canadian companies to develop a strong trade and investment relationship with Argentina, particularly in the agriculture, food and beverage sectors. The countries total trade within this sector has significantly developed and increased over the years, reaching almost $250 million in 2009.
In 2001 the Argentine economy was forced into a serious economic crisis, which resulted in devalued currency, negative economic growth, and capital flight. The Argentine government responded by using tighter fiscal controls and focused spending as a way to revive the economy. As a result, the country has experienced growing domestic consumption, increased investment, solid export demand, and favourable external conditions. Consumer confidence and spending increased, creating several opportunities for Canadian exporters of agri-food products. The traditional Argentine fresh food category, as well as the more recent food processing sector, has become lucrative markets for exporters.
Canada - Argentina Relations
Canada and Argentina share a long-lasting relationship. This positive relationship, based on shared commitment and common values, has been active since 1941. Through the Canadian International Development Agency (CIDA), Canada has been a strong supporter of Argentina's efforts toward international reintegration and development. As a token of this support, Canada has moved the CIDA regional office to Buenos Aires. In addition to this, in 1991 the Governments of Canada and Argentina signed the Foreign Investment Promotion and Protection Agreement (FIPA), which aims to protect and promote foreign investment. These two countries are also linked by the Canada-Mercosur Trade and Investment Cooperation Arrangement (TICA), signed in 1998. Overall, Canada and Argentina cooperate on several current global issues related to the environment, pandemics, and cultural diversity.
Argentina has consistently been Canada's sixth largest trading partner in South America. Despite being overtaken by other South American nations, Canada's total bilateral trade with Argentina has substantially grown to $875.8 million in 2009. This is more than a 100% increase from 2004 and a 20% increase from 2007. Many Canadian companies have been associated with this growth, especially those in the energy, mining, communications, environment, and agriculture sectors. Canadian foreign direct investment (FDI) in Argentina is currently $4.6 billion. This money is significantly invested in the agro-industrial sector which produces processed foods, dairy and livestock products. Overall, Argentina has proven to be an important destination for Canadian FDI, as increased opportunities emerge for Canadian companies in the oil and gas, mining equipment, information and communication technologies, and agri-food processing sectors.
|Argentina Total Trade||$107.3 billion|
|Trade balance||$19.3 billion|
|Canada-Argentina Trade||$875.8 million|
|Trade balance||($525.2 million)|
|Canada-Argentina Ag Trade||$243.4 million|
|Trade balance||($221.4 million)|
- Due to Canada's large import value of gold, medicaments, and grape wine, the country holds a significant negative trade balance with Argentina.
- These three imports account for $416.3 million or 59% of total Canadian imports from Argentina.
- Top Canadian exports to Argentina include; construction machinery, telephones for wireless networks, boring and sinking machinery, and smoke detectors/fire alarms.
- Canadian exports decreased by 53% from $267.9 million in 2008 to $175.3 million in 2009. This decline can be mainly attributed to a decrease in Canadian exports of power boiler and heat exchanger machinery, which were worth approximately $30 million in 2007. Before this period, Canadian exports consistently grew, increasing by $127 million between 2004 and 2007.
- Canada-Argentina total trade in 2009 was $875.8 million.
Accounting for 10% of the country's economy, Argentina's agriculture sector is modern and geared towards supplying both domestic and foreign demand. In 2009, Argentina exported approximately $30.8 billion in agri-food products worldwide. A significant amount of the country's agriculture revenue comes from export taxes that are placed on agricultural products. These taxes can range from 5% to 35% and are placed on a number of grain and oilseed commodities in addition to many other goods.
As a result of the recent recession, Agri-food imports fell from $2.9 billion in 2008 to $1.8 billion in 2009. Despite this slowdown, agri-food imports have steadily increased since 2002, the year following the collapse of the Argentine peso.
Argentina's main agricultural products include sunflower seeds, lemons, soybeans, grapes, corn, tobacco, peanuts, tea, wheat, and livestock. Although the majority of corn and soybeans produced in the country are grown from genetically modified seed, Argentina is a strong organic producer of vegetables and beef. With approximately 3.1 million hectares devoted to organic, the majority of organic products are destined for export markets, particularly the European Union. Although Argentina is no longer the world's largest exporter of beef products (including bovine hides), the county remains in the top ten, exporting $2.2 billion worldwide in 2009. In addition to being a significant beef exporter in the world, Argentina is the second largest sunflower seed and largest soybean exporter, exporting $864 million and $3.7 billion respectively.
|Lentils (green, dried, shelled)||$3.3 million|
|Seeds for sowing||$1.4 million|
|Bovine semen||$1.3 million|
|Bovine hides||$1.2 million|
|Food preparations, nes||$792,000|
- Canadian agri-food exports to Argentina totalled $11 million in 2009, experiencing an 18% growth between 2008 and 2009.
- Lentils, Canada's largest export to Argentina increased from $363,000 in 2008 to $3.3 million in 2009.
- Oilseeds, seeds for sowing, and fodder represent the largest category of exports to Argentina, accounting for 19% in 2009.
- The food ingredients sector contains significant opportunity for Canadian exporters. Main ingredients in demand include corn starch, natural sweeteners, powdered milk, egg albumin, soy protein, and gelatine.
|Grape wine, red||$56.0 million|
|Grape wines, nes||$21.0 million|
|Grape wine, white||$12.5 million|
- Canadian agri-food imports from Argentina increased by 1% from 2008, totalling $232.4 million in 2009.
- Canada holds a negative agri-food trade balance of $221.4 million - importing a greater value than exporting.
- The beverages, spirits and vinegar category represents Canada's largest imports from Argentina at $95 million or 41%.
- Total Canada/Argentina agri-food trade was valued at $243.4 million in 2009. Agricultural trade represents 28% of total trade between the two countries.
- Bulk exports, compared to consumer and intermediate exports, represent the lowest value each year. In 2009, Canada's bulk exports represented $62,548 decreasing from $131,321 in 2008.
- Intermediate exports, on the other hand, increased by 54%, from $6.5 million in 2008 to $10 million in 2009. Almost $4 million of this amount was devoted to edible vegetables, roots, tubers, and pulses.
- Consumer oriented products decreased from an all time high of $2.7 million in 2007 and 2008 to $893,736 in 2009. Of this amount, $811,000 is assigned to miscellaneous edible food preparations.
During most of the twentieth century Argentina suffered from persistent fiscal and current account deficits, high inflation and external debt. The country's most serious economic crisis occurred in 2001 when real GDP shrunk by 18% and 60% of Argentines were reported to be below the poverty line. Since this turbulent period, the government has readjusted its fiscal policies, focusing the recovery on revaluing the peso by selling currency reserves. As a result, real GDP rebounded by an average of 8.5% annually over the next six years. In addition to increased government stimulus, the country's economy benefited from rich natural resources, an educated population, an export-oriented agricultural sector, and a diversified industrial base. Argentina's GDP continues to grow, signifying recovery from the 2001 crisis.
During the 1990's the Argentine government decided to peg their currency, the peso, to the US dollar with the hope that it would restore confidence and combat hyperinflation. Although the strategy worked in the short run, the fixed peg proved to be a disadvantage as the adopted currency's exchange rate had little relation to their own economic conditions. Therefore, when the Argentine economy began to stabilize, the inability of its currency to respond proved more of a burden than a benefit. In response to this, the Argentine government devalued its currency and ended the fixed link with the dollar. This resulted in the peso falling 70% against the dollar, thus making Argentine products cheaper for those paying in foreign currencies. As a result, this increased the amount of exports out of the country and decreased the amount of imports. Although this boosted inflation, the economy moved toward recovery.
Falling from 41% in 2002, Argentina's inflation rate has averaged 8.5% over the past five years. Currently, the inflation rate is the lowest it has been since the crisis, falling to 7.7%. This has meant that consumer spending on goods and services has grown. In particular, sub sectors such as clothing and footwear, transport, and communications have experienced enormous growth rates. Other sectors that experienced above-average growth include leisure and recreation, and hotels and catering. The revival of the economy has also meant an increase in employment and therefore household incomes with dining out and vacationing becoming popular.
Argentina's most prominent industries are food processing, motor vehicle, consumer durables, textiles, and chemicals. Services make up 62% of the country's GDP while industry and agriculture make up 32% and 6% respectively. The tourism sector is growing and is expected to continue to do so as it becomes an integral part of the economy.
|GDP growth||(2008) 6.8%
|GDP/ capita (PPP)||US$13,800|
- Argentina's GDP consistently grew throughout 2003 to 2007. Despite a current slowdown, GDP growth remains positive at 0.9% in 2009.
- GDP output reached US$310 billion in 2009.
- The unemployment rate was 8.7% in 2009.
- Overall, 5% of the labour force represents agriculture, 23% industry, and 72% services. Tourism accounts for 10% of the labour force.
- Argentina's total trade balance was positive in 2009, largely as a result of the extraordinary increase in commodity prices of Argentine exports in the first half of the year.
- International reserves reached US$45 billion in June 2009.
- Reviving economic activity, the government's aggressive fiscal stimulus, and an increase in external demand has facilitated Argentine growth, which is forecasted to continue until the latter part of 2010.
- GDP is expected to grow 6% year-on-year in 2010, and 4.6% in 2011.
- Inflation is expected to increase to 12% by the end of 2010, and 13% by 2011.
- Increased investment is expected to continue as confidence in the economy recovers. More importantly, investment is diversifying into a wider number of industries.
- Growing domestic consumption, increased investment, solid export demand, and favourable external conditions are predicted to aid in fuelling economic recovery.
Although Spanish food is the predominant cuisine in Argentina, due to the large influx of immigrants throughout history, the country enjoys a wide variety of food including French, German, Italian and English. Argentines love their traditional barbeques and mixed grills, consuming more meat per head than in any other country. It is not unusual for families to gather over the weekend, creating a social outlet for enjoying the different foods that are served. In general, beef is the most popular meat in Argentina. The majority of the beef that locals buy is from cows raised in large feed-lots, while the best quality beef is exported. In recent years the price of beef has been increasing. This, coupled with the poorer quality of the meat, has pushed consumers to shift towards chicken as an alternative.
Due to the recovering economy, many Argentines have higher disposable incomes, and are spending increasing amounts on food. This provides significant opportunity for Canadian exporters as more expensive international foods have grown in popularity. Despite the traditional palette of an Argentine consumer to be relatively unadventurous, consumers have recently shown an interest in experimenting beyond regular consumption patterns. It is predicted that premium products, as well as full-service restaurants that offer different types of cuisine such as European and Middle-Eastern, will grow by 30% between 2008 and 2013.
Argentine consumers have shifted towards the healthy eating trend, increasing their consumption of healthier food options. Several companies have captured this market by promoting fresh, sugar and fat free food products. Argentina's population consumes more fresh food per capita than any other South American country. Organic food on the other hand has yet to take off. It is assumed that this is because fruits and vegetables are already widely available and generally organic in production. Although processed foods are consumed in Argentina, in comparison to other nations, there are fewer food options due to the large amounts of fresh produce already available to locals. That said, the consumption of packed and processed foods still increased steadily by 41% since 2003, with substantial growth in sub sectors such as meal replacement products, noodles, and snack bars. Although Argentines will continue to show an interest in food products that offer convenience and save them time (including ready meals, canned and preserved food, and frozen, dried, and chilled processed foods), fresh food will remain the dominant food source, with per capita consumption of fresh foods, predicted to increase by 6.5% between 2008 and 2013.
Argentines tend to consume four meals a day: breakfast, lunch, tea, and dinner. In general, lunch remains the principle meal of the day, while grazing and snacking is not common among Argentine diets. For the most part, families eat together six out of seven days a week; nevertheless, there is a growing trend towards eating out when at work.
- Argentine consumers demand low prices and good value, with lower income consumers currently preferring price over quality. Consumers want a product that not only tastes good, but looks good. Packaging is important in this market.
- Argentina is home to the largest Jewish community in Latin America. Kosher products are becoming fashionable with younger consumers in this segment. These products are also viewed as being of higher quality by the general consumer.
- Argentina's population enjoys drinking alcoholic beverages, particularly wine and beer, which make up 93% of the entire alcohol market.
- In 2008, wine sales increased by 27% in current value terms.
- Both the soft and hot drink sectors have experienced increased sales since the Argentine economic crisis in 2001, growing by 23% and 33% respectively.
- Argentina is forecasted to become the world's largest per capita consumer of soft drinks, with the average person consuming 134 litres a year. By 2012, this amount is expected to increase to 165 litres, surpassing the United States (US).
- Many consumers are focusing on their health by consuming healthy fruit and vegetable juices that contain increased amounts of vitamins and minerals.
- Functional and light products performed very well in 2009, gaining popularity among the Argentine population.
- Argentina was the third largest country in Latin America to launch new yogurt and chilled dessert products, accounting for 20% of new introductions. The top claims were no/low/reduced fat, calories, and allergens.
The Grocery Retail and Foodservice Sector
Food purchases have shifted from specialty retailers such as bakeries and butchers to modern supermarkets and hypermarkets. These modern stores are known for their quality, choice, and discounts. Profiting from the boom in consumer expenditure and grocery sales, hypermarkets and supermarkets are set to expand their presence in the Argentine market; gaining further share in the food market. Many gas stations have developed large convenience store areas where a variety of packaged foods are sold. This can be a typical lunch destination for those who wish to grab something while on the go. In addition to grocery shopping, Argentines enjoy eating out, particularly on weekends.
Lucrative Consumer Segments
Argentina's middle aged population (between the ages of 45 and 65) represents approximately 25% of the 40 million person population and is expected to grow until 2015. This group represents a lucrative consumer segment as they have higher disposable incomes. Their increasingly sophisticated taste for gourmet goods, particularly in the food and drink sectors provides significant opportunity for Canadian exporters. These consumers are demanding higher quality products, focussing on their health and wellness.
Approximately 17% of the population is composed of people in their twenties. This consumer group is particularly important for marketers to build brand loyalty as they will become main consumers as they grow older. In general, it is this group that is more adventurous when it comes to trying new products on the shelves, making them a major target for marketing campaigns. Wine consumption has become increasingly popular within this segment, as it is considered to be a symbol of sophistication.
Export Development Canada has stated that the Argentine economy shows growing potential for Canadian companies to develop trade and investment opportunities; with solid prospects in a number of different sectors. Moreover, the Canadian Trade Commissioner Service in Buenos Aires lists agriculture, food, and beverages as the number one priority sector for Canadian exporters. Canadian agri-food exports grew to just over $11 million in 2009, experiencing an 18% increase from 2008. With consistent growth over the past few years, the Canadian agri-food export sector demonstrates strong potential in the future.
Due to Argentina's large agricultural sector, Canada's largest competition for agricultural imports is domestic supply. The cost of transport, tariffs, and current exchange rates make agri-food imports to Argentina less competitive than domestic supply. Argentina does however import products that are not locally produced or processed, specifically in the food processing ingredients sector.
International competition comes primarily from the Mercosur group of countries, which includes Argentina, Brazil, Paraguay, Uruguay, and most recently Venezuela. Associate members include Chile, Bolivia, Peru, Ecuador, and Colombia. The group's purpose is to increase regional trade by lowering tariffs and non-tariff barriers to trade, and to move member countries' economies away from import-substitution models, towards more open economies based on trade and exports. In addition to this, these countries have a significant advantage due to geographic proximity.
In terms of Argentina's total import statistics from 2009, the country imported the largest value of goods from Brazil (30.3%), US (13.2%), China (12.5%), Germany (5.2), and Mexico (3%). Canada's largest agri-food competitors include Brazil, Paraguay, and Ecuador, who combined exported $1.1 billion worth of agri-food goods to Argentina in 2009.
Due to the increasing consumer demand for foreign goods in the Argentine market, local grocers are looking to increase their supply of imported products on their shelves. Canadian exporters should capitalize on this emerging opportunity and take advantage of the market sooner rather than later. It is recommended that Canadian exporters use the services of a carefully selected representative, distributor, or agent in Argentina. Canadian firms are encouraged to take advantage of the Canadian Trade Commissioner Service which can assist with accessing business opportunities in Argentina www.tradecommissioner.gc.ca. The services of the Canadian Embassy to Argentina and Paraguay are also available: www.canadainternational.gc.ca/argentina-argentine.
Currently, Argentina has a blanket suspension on canola seed imports. Canada has made numerous representations to Argentine authorities seeking further information; however, authorities have not yet provided the current import requirements (regulations on GMOs) for canola seeds. In addition to this, Argentine authorities have introduced a certificate for the import of fish and seafood products which contain attestations that are either problematic or require further clarification. With the aid of the Government of Canada, through the Canadian Embassy in Argentina, representatives aim to finalize the certificate, permitting the export of Canadian fish and seafood products to Argentina.
- Canadian companies looking to sell into the Argentine market must be prepared to pay import duties, which may put them at a slight disadvantage compared to many Argentine suppliers, or companies from the Mercosur group. Although import duties have come down recently, import tariff rates still range between 5% and 35% for most food products.
- A Canadian firm looking to export food or beverage products must be prepared to deal with the document requirements of Argentine government institutions that register and regulate food and beverage imports. The National Service of Agricultural Food Health and Quality (SENASA), the Argentina National Drug, Food and Medical Technology Administration (ANMAT), and the Argentine National Food Institute (INAL), are the main institutions with which an importer may have to work.
- SENASA is primarily responsible for looking after fresh or frozen animal, plant or seafood products.
- ANMAT is the government regulatory body that deals with the oversight of health and quality control measures for products that may affect human health.
- INAL, which is under ANMAT jurisdiction, regulates processed foods that are intended for direct human consumption, as well as health supplements and alcoholic (with the exception of wine) and non-alcoholic beverages.
- Import rules and regulations are usually relatively straightforward; nonetheless, product authorization and other approvals may be time consuming, often taking months before final product approval is received.
- Label approval must be obtained for each product. Ingredients and nutritional information must be on imported products in Spanish, in addition to English or French.
Business Travel Tips
- Hiring a translator is suggested if the visitor does not know Spanish as many documents and meetings are expected to be in this language.
- A valid passport is required for entry, and business travellers require a visa.
- Canadian bank cards are widely accepted; however credit cards are not.
- An international driver's license is recommended for rental services, although taxi services are generally economical within most cities. Argentina also has one of the world's highest rates of traffic accidents; travellers should bear this in mind before considering driving in Argentina.
- Many of the northern provinces of Argentina suffer from seasonal flooding, which can lead to disruptions in transportation and in the delivery of foodstuffs. Travellers should keep informed of regional weather forecasts and plan accordingly.
- Both men and women dress more formally than North American standards. Dark, conservative colours and business suites are most appropriate for business functions.
- Social customs are also very formal. Politeness, manners, and attention to rank and title are very important. Promptness is expected.
- Body language conveys a lot in Argentina. Try and maintain eye contact and avoid placing your hands on your hips when speaking as this usually means you are angry.
- Make sure appointments are made prior to arrival; it is difficult to meet with someone without having made an appointment.
- Travellers should be wary of pickpockets in crowded areas.
- The currency is the Argentine peso (ARS). U.S. dollars may be accepted by some tourist-oriented businesses.
Agriculture Sector & Policies
Argentina has a very strong agricultural sector, producing goods for both foreign and domestic demand. Agriculture currently accounts for 6% of the Argentine GDP. Almost 50% of Argentina's total exports are agriculture related. Currently, processing facilities are being updated to meet improved food quality and safety initiatives. The country has very good storage, distribution, and logistics systems designed to facilitate the export oriented activities of this sector.
During the past year, Argentina's traditionally fertile soils have experienced significant drought. The drought extends from the southern province of Rio Negro to the central provinces of La Pampa and Cordoba. As a result, Argentina's wheat harvest for 2009 was cut in half. It is expected that the 2010 harvest will hit a record low. In response to this, the government has declared an “agricultural drought emergency”, which will provide farmers a reprieve on provincial taxes.
Argentina's arable land represents just over 10% of the entire country with 0.36% devoted towards permanent crops. The country is a large producer of fruit, soybeans, beef, and wine. Argentina's soybean production has more than doubled since 1990, expanding faster than domestic consumption. This has created tremendous opportunities for exports in the global market. Argentina is a renowned exporter of beef with the vast and empty Pampa plains making an ideal location for cattle grazing. Moreover, wine production has long been a part of culture, with the western provinces (Mendoza, San Juan, and La Rioja) providing the ideal fertile lands needed for vineyards. Until the early 1990s, Argentina produced more wine than any other country outside Europe; focusing on quantity rather than quality. Since then, Argentina's wine producers have turned their attention to producing premium wines that are fit for export.
During the last few years, Argentina's organic sector has experienced a very high growth rate. Approximately 99% of the total area under organic production was devoted towards pastures for cattle production. These pastures can be mostly found in the southern part of the country, where agriculture has been extensive for decades; therefore no conversion period is needed. The remaining 1% is for the production of wheat, sugar, and fruits and vegetables. The main organic vegetables are onions, garlic, asparagus, and lettuce. With regards to fruit, Argentina is one of the world's largest producers of certified organic apples and pears.
2828 Tagle, 1425 (Casilla de Correo 1598, 1000, Correo Central)
Buenos Aires, C1425EEH Argentina
Tel: (011-54-11) 4808-1000
Fax: (011-54-11) 4808-1111
Hours: Monday to Thursday – 08:30 – 12:30, 13:30 – 17:30
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Mr. Michael Bailey
Agricultural Technology and Equipment, Agriculture, Food and Beverages, Bio-Industries, Economic and Trade Policy, Education, Fish and Seafood Products, Market Access, Science and Technology
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