Buenos Aires, November 6th. There are four larger rural unions in Argentina, the Rural Society (SRA), Rurals Confederation (CRA), Coninagro (cooperatives) and Federated Farmers (FAA), and the four joined in the Mesa de Enlace, the super-structure that convert itself in a task force against the government of Ms. Cristina Fernández de Kirchner, from 2008 to 2015.
This four unions supported, to a greater or lesser degree, the Coalition Cambiemos to take office in 2015, against the Peronist candidate Daniel Scioli. The promise to eliminate the export taxes was a relevant issue to gain the support of the farm sector, and that was what Mr. Mauricio Macri did in December 2015, when all export taxes were suppressed, except for the soybean complex. This measure and the liberation of foreign trade were applauded by farmers.
But in September 2018, and due to the economic crisis, Macri’s government had to reinstate the export taxes at AR$4 per dollar for the raw materials (grains) and AR$3 per dollar for the byproducts. As the dollar cost AR$40, export taxes represented about 10% of that value.
But after the primaries (August 11th), the dollar jumped to AR$60, a currency depreciation that liquified the impact of the export taxes, which represented 6,6% of the dollar.
Now, farmers are afraid that elected president Alberto Fernandez increase the export tax rate. In fact, if the President, which will take office next December 10th, rise the export taxes to 10%, he would only adjust the tax to the initial rate. But farmers are suspicious that the new government could rise even more the tax, perhaps to 12% for the cereals and 30% for the soybean (currently fixed at around 25%).
The leadership of the Santa Fe Rural Confederation expressed via a press release its opposition to the continuity and/or the rising of the export taxes, saying that they “will not tolerate that Government uses the farming sector as collection box”.
Farmers joined in WhatsApp groups expressed their discomfort with rumors about an increase in the export taxes. It’s no a minor matter that in the main agricultural provinces (Santa Fe, Entre Ríos and Cordoba), official coalition Cambiemos defeated Alberto Fernandez’s Frente de Todos. Farmers think that at the end of the day voters in the largest urban conglomerates, far away from the rural life, impose their agenda over the rural communities. These farmers are calling for outrages on the side of the routes, like in 2008 when the former government of CFK imposed a mobile export taxes scheme.
Mr. Fernandez faces double trouble since December. On the one hand, he need not open a conflict front with the rural country. He inherits a collapsed economy, signed by 40% poverty, 55% annual inflation rate, 3,5% GDP drop, 10% of unemployment, and a billionaire debt taken by the Macri’s administration. An early conflict could be so harmful to its governance.
On the other hand, he needs to collect more taxes to balance the fiscal deficit inherited and, since the days of the Colony, the export commerce is the better source to do it. Finally, Fernandez will also need dollars to pay the debt and for this reason, he should not affect the farm exports via increasing the taxes.