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Government To Give Struggling Wine Industry A Hand

By | [email protected] | January 28, 2016 3:20pm

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While in Mendoza Province today, President Mauricio Macri announced the state will buy AR$ 100 million worth of excess stock from small wine producers as a way to help the industry, which has been going through a crisis lately (more on that later). We can only hope Macri will have a follow-up announcement about hosting a massive party at the Casa Rosada in the next few days. Wine would be on him, you would just have to bring the cheese.

Speaking from a vineyard in the Las Heras district, Macri requested representatives from the wine sector to “create more jobs” in the province itself in order to reach the goal of “zero poverty as soon as possible,” which was one of his main rallying cries along with fighting drug trafficking during his presidential campaign.

Joined by Mendoza and San Juan Province Governors Alfredo Cornejo and Sergio Uñac as well as Agriculture Minister Ricardo Buryaile, the President went on to encourage local vineyards to increase their production: “We have a lot of room to grow and improve and to create jobs for Argentines,” said Macri, who at the same time slid a passive-aggressive message when he said he “hoped they wouldn’t need the help the State will provide them in the future.”

Finally, just like every time a camera is pointed at him, Macri didn’t let go of the chance to try to be funny with one of his now infamous dad jokes. Before tackling the subject that really brought him to the province, Macri had time to talk about the superclasico between River and Boca that will take place in Mendoza on Saturday and “warned” Governor Cornejo that if he “wanted the President to come back to visit the province, he should make sure Boca has a good day on Saturday.” Jokes about bribing referees are always fun.

(Macri used to be the president of the Boca Juniors football club, fyi.)

Argentina is the fifth largest wine producer in the world but the tenth wine exporter. 70 percent of that production comes from Mendoza, which makes the magic happen in its 1,200 bodegas. However, the sector hasn’t been going through the best of times during the past few years, as it costs more for producers to produce the wine than to actually sell it.

As The Bubble’s Bianca Fernet explained, in 2013, exports fell for the first time in a decade from US$918 million to US$866 million. 2014 estimates came in at US$823 million. Costs increased for industry essentials such as bottles and barrels, and the difference between the parallel and official dollar exchange rates during the Kirchner administration exacerbated the problem. To put some numbers on it, imagine a wine producer exports 100 bottles of wine for US$15 dollars apiece. Overseas, his or her earnings would amount to US$1,500. But laws forced these exporters to bring these earnings back at the official rate of AR$8.50 per USD, so that US$1,500 became AR$12,750 as opposed to the AR$20,250 these dollars would have been on the parallel market.

The difference in these values took a big toll on the industry, and it still is.