a dramatic turn on soybean export tax policy shocks oilseed industry

Photo: Presidente Macri (left) and its “superMinistry” Nicolás Dujovne

Buenos Aires, August 14th. Finally, Presidente Macri’s Administration decided to suspend the reduction on the export tax to soymeal and soyoil for the next six month. When Macri took the control of the country, in December 2015, he promised farmers to eliminate the export taxes, imposed by previous administrations. But he didn’t fulfill the entire promise: Government eliminated the export taxes to all crops except to soybean complex. In December 2015, Federal Administration reduced soybean export tax from 35 to 30%, and soyoil and soymeal from 32 to 27%, maintaining the 3 percentual gap between the bean and its byproducts.

Farmers continued expecting the elimination of this tax to the largest Argentine export product. Then, during 2017, Macri announced a gradual reduction to the export tax, at a rate of 0.5% each month. The measure was put into effect in January 2018; this month export tax for byproducts was fixed at 23% and 26% for the bean.

But facing an economic crisis marked by Peso (Argentine currency) slumping against the dollar, the inflation rate overwhelmed and surpassing 30% on annual basis, a recession in the domestic market and interest rates over 40%, finally, may be pressed by International Monetary Fund, President Macri’s Administration decided to stop the export tax reduction to soybean byproducts for the next six months.

It was a hard shock to farmers, which had received the direct promise from President Macri that export taxes will continue reducing it. Nevertheless, the Government decides to continue with the plan to reduce the tax to soybean, until it reaches a 23% rate, the same rate for its byproducts. Now, this shocks the oilseed industry, which always has a 3 percentual points gap against the bean.

“This is the worse measure that Government could take”, Hector Huergo, AgNews editor of influential newspaper Clarin says via Twitter. “It punishes the added value process and will generate a drop in the soybean price”, Huergo added. “This erodes the trust that farmers put in a leadership that they supported”, the manager of AdBlick Agro, Dardo Lizarraga opines.

Our own sources opine that the elimination of the gap between the bean and its byproducts will drop the soybean prices, about 9 dollars per tonne. “We can’t believe it. It was a historical consensus (the gap) that benefited the farmers because the industry buys the bean all over the year, not only at harvest times as exporters do it”, a source on the oilseed industry said to www.eFarmNewsAr.com.

Also, the Federal Administration eliminated the Solidary Fund, a fund created in 2009 by former Presidente Cristina Kirchner, that distributes 30% of the soybean complex export taxes between Provinces and counties (“municipios”). With those measures, President Macri expects to save 420 million dollars this year and 1.800 in 2019, considering the current currency rate 30 AR$ to one dollar.