Buenos Aires, November 26th. There is a huge expectation about the economics that the elected government will take after assuming office, next December 10th, and for the farming economy, the level of export taxes is at the top of the agenda. As we said several times from this website, past September 2018, president Mauricio Macri, drowned by the fiscal deficit and the increasing economic recession, decided to re-install the export taxes for all grains, fixing a value of AR$4 per exported dollar (in the case of soybean complex, an 18% is added to this fixed value). At that time, the currency rate was AR$40 per dollar. A year later, after the primaries, the Peso dropped and the dollar rose to AR$60, i. e., a 50% increase. Thus, the export taxes that represented around 10% of the dollar, plunged to 6,6%. Clearly, this benefited farmers, which received a higher price for their grains, closer to the international prices than before.
Historically, farmers have distrusted the economics of the Peronist governments. They consider that its political leaders tend to apply populist measures that, finally, transfer resources from the agriculture and livestock sectors to the industry or convert them into subsidies to the poorer segments of society.
Now, they suspect that Alberto Fernandez will increase the export taxes, to deal with an economy in recession. But, the main questions are how much and for what products. Logically, it could be assumed that if the currency rate remains stable at AR$60 by December 10th, the new government will update the duty to AR$6 per exported dollar, to maintain the original 10%. But considering the precedent of former president Mrs. Cristina Fernandez de Kirchner, they don’t discard that export taxes could climb to 15% for corn and wheat, and 30% or more for the soybean complex.
Thus, farmers are anticipating the sales, to freeze the current export taxes level. To November 22th, they had sold 46% of the expected wheat harvest (8.7 MMT), 25% of the corn one (13.2 MMT), 25% of the barley one (0.9 MMT) and 13% of the soybean harvest (6.2 MMT).
These ratios surpassed the historical ones for this date, especially in the case of corn. Past year to the same date, farmers had sold a third of the current volume.
The reason behind this behavior could be related to the fact that corn is a raw material for the food industry, basically poultry, milk, beef and pork ones. It is possible that policymakers are thinking that if they raise the export taxes to the corn, they will prevent price increases in the food basket. Farmers know it and they are trying to elude the trap.