The local industry is alarmed by the crisis in Brazil, Argentina's main partner, mainly because some importers have begun to reduce their orders and because exporters fear there will be a considerable change in the payment mechanism.
According to Jorge Perez Cuesta, President of ProMendoza, "some buyers have decided to be more cautious. That's why they've asked companies not to send them 100% of their order, but to send them 50% to 60%, while things evolve. They haven't stopped working, or closed sales, but they have reduced their orders," said the businessman.
Local chambers agreed with this analysis. Guillermo San Martin, the Manager of the Association of Garlic Exporters (Asocam), said that "the situation and the way importers work has changed in recent times, especially since January of this year. And this will surely get worse."
In this regard, he said, importers used to be more aggressive in terms of shopping, as they would demand stock and pay in advance. Now, "they buy when they need product, and payments of goods are on consignment."
Raul Aruani, from the Association of Fresh Fruit Producers (Aspeff), said "importers don't know what the market prices will be, or how the Real is going to fare, which is why they'll continue to reduce their orders to see what happens with the economy."
According to Perez Cuesta, this situation is most likely to affect wine and fruit exporters in the short term as the season of other products, for example garlic, comes to an end this month.
However, all entrepreneurs are concerned about the crisis in Brazil; both the entrepreneurs who make small shipments, such as fresh fruit, and those that have a strong position in this market, as in the case of garlic.
According to Bizzotto, "a possible devaluation or recession would end up hurting those who don't make big shipments and leaving without effect the small percentage of shipments. While those who make big shipments would be put in a position in which they'll have to analyze how to place their product."
Only two days have passed since the debacle broke out in Brazil, Mario Bustos Carra, from the Chamber of Foreign Trade of Cuyo (CCECuyo) said, but this is a logical and expected consequence at a time like this.
According to him, "in a crisis, importers immediately decide to stop orders, decrease purchases, and lower their orders, to see if things will normalize or not. In fact, this is the same thing that happened with the crisis of Dilma Rousseff. The companies from Mendoza must know that they are or will be affected by this."
In addition, "many buyers also take advantage of these circumstances to change their payment methods and to begin paying things over longer periods of time."
Source: Los Andes