Argentina, one of the world's leading producers and exporters of soybeans and derivatives, informed farmers on Tuesday (04.03.2020) that it will raise the rate it applies to the export of this grain, a measure that seeks to improve the tax revenues of the second South American economy, mired in recession since 2018.
The decision was announced during a meeting held today between the Minister of Agriculture, Luis Basterra, and the so-called Liaison Commission, made up of the four largest agricultural employers in the country.We were informed that export duties on the entire soybean complex will rise to 33%, except for those producers who will enter a compensation system.", the employers' associations said in a joint statement.
The export duty rate - called "retention" in Argentina - is currently 30% for shipments of soybeans and derivatives (oil and flour). The duty on this oilseed and its by-products is Argentina's main export complex.
According to official data, in 2019 sales of soybeans and derivatives (oils, flours and biodiesel) totaled 16.494 billion dollars, 13,8% more than in 2018.
Last December, four days after Peronist Alberto Fernández assumed the Argentine presidency, the new government had already raised export duties on soybeans from 24,7% to 30%, a measure that it justified on the basis of the “serious situation facing public finances.” For the 2019-2020 agricultural campaign, Argentina, the world’s leading exporter of soybean oil and meal, expects a soybean harvest of 54,5 million tons.
Dialogue with the sector
Last Sunday, in his opening speech of ordinary sessions in Congress, Alberto Fernández revealed that he had made a “generous proposal” to the agricultural employers to increase export duties only for soybeans, without modifying the rate of the other 24 grains covered by the tax. “I hope that this time, through dialogue, we will find the path that will lead us to sustain development and preserve public accounts,” said Fernández.
The Liaison Commission confirmed that the Government will maintain export duties on the rest of the crops, “with reductions in some of them, and the withholdings on regional economies will be reduced.” According to official sources, the intention of the Executive is to lower the rates for sunflower seeds and oils, wheat and corn flour, fishery products, sheep and pig meat, among other products. During the meeting, the Government mentioned the possibility of reviewing the tax pressure on the sector with a scheme towards lowering taxes during a certain period and of advancing in the analysis of tax mechanisms to compensate for the fiscal effect of export duties.
The rural employers' associations have insisted that the "only way to achieve full development of the sector" is to "eliminate" export duties on all agricultural products. "Each of the entities will submit this new scheme to their governing bodies in the coming days, after which the Liaison Commission will define the next steps and actions to follow," the employers' associations indicated.
Export taxes were the focus of a severe conflict between the rural sector and the Argentine government in 2008, when Fernández was Chief of Staff of Cristina Fernández's Executive (2007-2015).
That conflict included prolonged protests by rural employers, with roadblocks and strikes in the sale of agricultural products, which had a direct impact on the country's economic activity that year.
Alberto Fernández left the Cabinet in mid-2008, in the midst of the conflict.
Source: Reuters
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