Report Nº: 86516/06/2020
Expropriating the Vicentin Company to allegedly ensure “food sovereignty” has parallels with the expropriation of Aerolíneas Argentinas to recover “air sovereignty”. The federal State ended up spending more on subsidies to Aerolíneas Argentinas than on food programs to alleviate hunger.
Vicentin, a company born in Santa Fe province, is a grain, cereal, cotton, and bioenergy producer. Marginally, it entered into other businesses such as concentrated grape juice, wine, feedlots, and honey. Due to economic problems, it stopped paying its providers in December 2019 and filed for bankruptcy in March 2020. Even though a normal judicial process was ongoing, the Argentine State decided to interfere expropriating it.
The argument is the defense of “food sovereignty”. The rationale is analogous to the one used to justify the nationalization of YPF, where “energy sovereignty” was appealed to, and that of Aerolíneas Argentinas, where the issue of “air sovereignty” was raised. By praising the proposal with an epic and patriotic tone, an objective assessment of the benefits and costs involved is neglected
A key aspect is how these expropriations affect public finances. Taking the case of Aerolíneas Argentinas, according to data from ASAP and the National Budget, between 2008 (the year of the expropriation) and April 2020, the federal government allocated fiscal resources as follows:
These data show the enormous iniquity that is incurred when the State expropriates a company. The main beneficiaries in the Aerolíneas Argentinas’ case were its employees. For them, the federal government spent about US$ 3,000 per month per employee since the takeover. For hunger alleviation, in the same period, the federal government allocated only US$ 10 per month per indigent person. Ironically, the food program is claimed to be a guarantee of “food sovereignty,” the same argument used to expropriate Vicentin.
With the Aerolíneas Argentinas’ expropriation, ownership is formally transferred to the State, but factually the possession remains in private hands, which are those that manage the company. In theory, the priority is the general interest. However, what experience demonstrates is that the interests of the company’s workers prevail. Thus, in the name of “sovereignty”, a huge private appropriation of public funds occurs. A very illustrative example is the recent labor agreement signed by Aerolíneas. With revenues almost at zero level, due to the pandemic, Aerolíneas “negotiated” with the unions the paying of 100% of wages. The “negotiation” is easy because the State assumes the cost with subsidies and labor taxes reduction. The rest of the airlines and their workers –who are Argentine citizens with the same rights as Aerolineas Argentinas’ employees– are abandoned by the State, falling in a very critical financial stress.
If the expropriation of Vicentin succeeds, the foreseeable result will be a massive transfer of public funds in favor of his employees, creditors, and the millionaire owners that suffered the expropriation since, sooner or later, they will be compensated. There are no chances that expropriation reduces hunger. Meanwhile, the Argentine State decides to take over Vicentin’s debt (of the order of US$1.35 billion), when it is begging its creditors to accept debt cuts and grace periods because it cannot pay its own public debt in dollars.
Vicentin’s crisis must be resolved within the legal framework of insolvency proceedings. The State’s intervention should be limited to that of the judiciary, promoting rapid, fair, and transparent negotiations between owners, creditors, and third parties interested in investing in the company. Following this path shows respect for institutions and avoids that, under the false allegation of “sovereignty”, public funds private appropriation occurs, as it happens in Aerolíneas Argentinas.