May 23, 2008

  

Argentina's government may tweak, but not scrap grain export tax
 

 

Argentina's government will not consider scrapping the sliding-scale export tax on grains but expressed willingness to discuss reforming the system to facilitate futures trading, Cabinet Chief Alberto Fernandez said Thursday (May 23, 2008).

 

Farmers are set to meet with Fernandez and the economy minister Thursday for the first talks since farmers suspended their strike Wednesday. Farmers are demanding that the government scrap the new sliding scale tax which would sharply raise the export tax on soy.

 

However, farmers have adopted a more conciliatory tone lately and have suspended the strike to jump-start stalled negotiations.

 

The talks are expected to centre on "resolving the problems with future markets, Fernandez told local radio Global Station, refuting the notion that the government had realised it had made a mistake by implementing the new tax.

 

Farmers have complained the 95-percent tax imposed on any soy value higher than US$600 effectively caps prices and makes futures trading impossible.

 

The sliding scale "has had a devastating affect on agricultural markets (and) taken away the ability to freely protect oneself from adverse price changes," according to the soy chamber, ACSOJA.

 

Farmers had been on strike since May 8 to protest the tax.

 

Even though they have made conciliatory gestures, farmers remain skeptical that the government will be willing to make concrete concessions.

 

"The government has lost credibility after a month of talks with few gains," Rural Society president Luciano Miguens said last week.

 

The government asserts that even with the higher taxes, farmers are enjoying an unprecedented windfall due to soaring international commodity prices.