April 1, 2008

Argentina to grant soy tax refunds to appease strikers

In a bid to resolve a 19-day farm strike that has produced food shortages and a major political crisis, Argentine Economy Minister Martin Lousteau on Monday (March 31, 2008) announced measures to compensate small-scale farmers for the effect of a recent, controversial tax hike on soy exports.

Lousteau said the government would offer refunds on export taxes equivalent to the loss that these smaller producers have incurred since the tax was raised under a new system introduced on March 11, when it provoked farm strikes which choked off agricultural supplies to major ports and cities.

Vowing to challenge the heavy concentration of soy production in the hands of a few large producers, Lousteau said the measure would cover 80 percent of all producers, those who produce just 20 percent of the country's total output. Additionally, special transport subsidies will be given to small producers in Argentina's more distant, poorer northern provinces.

Lousteau also said the government would put in place cheap credit plans for dairy producers to diversify the range of agricultural products the sector offers to the market.

As for the measure announced on March 11, which boosted soy export taxes from a fixed rate of 35 percent to 46 percent, according to the prevailing international price for soy - Lousteau argued that the latest measures were consistent with an attempt to reduce the dominance and concentration of big soy producers.

He spoke in advance of President Cristina Fernandez, whose much-anticipated speech comes as Argentines faces ever-growing food shortages in supermarkets and stores.