January 8, 2009

The US Department of Agriculture on its report Wednesday (January 7) has lowered its overall Argentina wheat production forecast to 9.5 million tonnes in 2008/09 due to dry conditions that severely impacted yields. Wheat exports are expected to fall to 4.2 million tonnes as a result of the lower production. The Post lowers its corn production forecast to 16.5 million tonnes for 2008/09 due to drought conditions that severely impacted yields.

Post lowers the 2008/09 export forecast for corn to 9 million tonnes to compensate for lower expected production. A plan to reduce the export tax on wheat and corn by five percentage points was published in Argentina's "Boletín Official" on December 22, (Joint Resolution 26/2008 and 28/2008) -- for wheat, the new export tax is 23 percent; and for corn the new export tax is 20 percent.

The Government of Argentina (GOA) also published a plan to stimulate wheat and corn production, called "Plus-Programs." The programs stipulate that when historical production averages are exceeded -- 13 million tonnes for wheat and 15 million tonnes for corn -- export taxes will decrease by one percentage point for large producers, two percentage points for medium-size producers, and five percentage points for small producers, per each additional million tonnes produced. On December 30, 2008, the GOA published a measure to increase its control on agricultural exports (Resolution 8590/2008). The measure is called the "Single International Sales Register" for all ROEs (export registrations).

The "Single International Sales Register" for all ROEs (export registrations), created by this resolution, will enable ONCCA to freely share information related to export sales with Argentina's tax office (AFIP), Customs and other relevant government agencies for the purposes of auditing and contract compliance. The measure will also purportedly increase the speed at which ROEs are approved or denied (within 5 working days of the request), although it stipulates that modifications to contracts or any declared information requires an evaluation period of up to 30 working days before approval or denial.

The GOA published on December 31, 2008, an incentive program for wheat production (Decree 2315) that stipulates when historical production averages are exceeded -- 13 million tonnes -- export taxes will decrease by one percentage point for large producers (those producing over 2,500 tonnes of wheat), two percentage points for medium-size producers (between 500-2,500 tonnes), and five percentage points for small producers (up to 500 tonnes), per each additional million tonnes produced. This plan has been called the "Wheat-Plus" program.

The extremely dry conditions and very hot days during the growing season severely impacted corn fields in most of the corn planting area. Post lowers its yield forecast to 6.6 million tonnes per hectare due to drought.

As previously mentioned, Joint Resolution 26/2008 and 28/2008 lowered export taxes on corn by 5 percentage points. The new export tax on corn is 20 percent. Joint Resolution 27/2008 and 29/2008 lowered the export tax for corn sub-products by 5 percentage points. The new export tax on corn oil is 15 percent.

On December 31, 2008, the GOA published an incentive plan for future corn production (Decree 2315). The measure stipulates that when historical production averages are exceeded -- 15 million tonnes -- export taxes will decrease by one percentage point for large producers (those producing over 5,000 tonnes of corn), two percentage points for medium-size producers (between 1,000 and 5,000 tonnes), and five percentage points for small producers (up to 1,000 tonnes of corn), per each additional million tonnes produced. This plan has been called the "Corn-Plus" program.