A proposal against hunger in Argentina

Alberto Fernández will start his administration with a state policy against hunger. He announced the creation of a National Food Security Program, a Federal Fund and the enactment of measures and laws that, despite the announcements, contribute little to the solution of the problem.

First, it should be noted that a home is hungry and/or its basic needs are not satisfied by the simple fact that the incomes of those responsible (parents or guardians) are not enough to acquire a basic basket of goods.

We have, therefore, a long-term solution: having genuine, registered and well-paid work. We face, therefore, a problem in the labor market (there is a lack of incentives for formal hiring) and a problem in productivity (there is a lack of machines and education).

We also have a monetary problem. Everything generated by those in a vulnerable condition is confiscated by the inflationary tax. Without a solution to inflation, there is no possible solution to hunger.

The solution to the problem of hunger goes through work. Everything else is palliative.

Among these, which the Government is wrongly considering as substantive measures, the recent “Argentina Against Hunger” Council proposes.

Prices Care by law. This means that by law the key prices of the family basket will be controlled. A strange mechanism of maximum prices agreed or not with the producing companies. This mechanism has a history of 4,000 years of failures. Each time an attempt was made to control prices, the quality losses and, later, the shortage and the marginal markets emerged. Consumers supposedly benefited end up paying higher prices if they do not access rationed food.

VAT refunds through a food card. This measure is correct because 45% of food prices are national, provincial and municipal taxes. The tax pressure on food threatens the poor.

Reduction of prices of “healthy” products. The introduction of the “healthy” concept is the son of the demonization of the food industry and that constitutes a conceptual error with an ideological burden of the past. A useless debate.

Shelves Law. The law has no relation to the solution to the problem of hunger. First of all, the large stores explain only 30% of the products that are sold in the formal economy. In other words, only two out of ten products would be reached by said law. Secondly, this law starts from a diagnostic error regarding economic concentration and its eventual consequence. Inflation is a monetary phenomenon, the quantity has nothing to do with the number of players or their quality. In other countries, they market the same companies and produce the same players and there is no inflation. Third, the Shelves Law starts with the arrogance of thinking that low-income consumers do not know which product to choose to save their budget. It implies assuming that the government official from his desk chooses the family basket better than the head of the family. Fatal arrogance in its purest form.

A concrete proposal

Every homeless assistance program must necessarily be transitory. Posing it permanently implies recognizing that there will be no fiscal, monetary and labor reforms that will solve the problem in depth. Living with hunger is only business for politicians.

In terms of palliative and transitory assistance, we present a concrete proposal with a direct, immediate and efficient impact on the provision of food to those most in need.

In Argentina, there are about 620,000 small and medium enterprises.

The indebtedness of all such companies reaches 1.8% of GDP. Such indebtedness is fiscal (national, provincial and municipal) and financial (private and public banks). And that’s why it’s critical. In many cases, it is due, ordered, close to foreclosures and preventive contests and in threats of bankruptcy.

The indebtedness locks all the development of the companies, creating extraordinary outcomes in lawyers and experts. It multiplies the costs via interest and generates sustainability problems and breaks in the solvency and liquidity indices.

This business debt is short term and, therefore, given the circumstances, of doubtful possibility of effective payment.

The concrete proposal is that payment of these debts in kind (food) be instructed within ten years.

This implies, in the first place, to change “short term for long term” and “bad currency” (pesos) for good currency (“food”).

An SME that accesses this program (which should be voluntary for companies) must consolidate all its debt (fiscal and financial) and establish a quantum of certain foods selected by the authority of the Ministry of Social Development, which must buy and send to the food centers that are determined

Some advantages

For companies, it is a relief because it stretches the term
For the State, debt renegotiation does not imply confiscation or liquidation
For the financial sector, too, because all business balances are cleaned.
For banks, they change a debt of doubtful collectibility for compensation with the State.
For the food program, it involves receiving food purchased efficiently, in a timely manner, without intermediation or costly bureaucracies. Also without “porous hands.”

In numbers, for a GDP of US $ 400,000, the fiscal and financial debt of SMEs reaches 1.8%, that is, some US$ 7.2 billion.

They would be paid in kind (food) in ten years. It is, therefore, a food flow of US$ 720 million over the next ten years, about $ 3.6 billion per month.

The main achievement of the system is the temporal finitude (the mentioned ten years) because the solution to the problem of hunger is in the creation of wealth and not in distribution, however efficient it may be.

Without a doubt, a proposal to take into account, much more effective than looking for the position in the gondolas, measuring the distance between food, or creating advice and selfies photos of more or less well-intentioned celebrities.

By Gustavo Lazzari