January 14, 2009

Argentina's grain export taxes will not be lowered as the government expects prices to rebound, according to a senior official in the country's tax agency.

Lowering tax is a mistake when market prices are likely to increase in the medium and longer term, and declines in grain prices were caused by speculation, said Ricardo Echegaray, director of the tax agency.

Argentina's four largest farm groups have demanded for a total scrap of export taxes, warning that they may initiate strikes if their demands are not met.

The Argentine government has recently reduced corn and wheat exports to 20 percent and 23 percent, respectively, in order to spur consumption and shipments.

Echegaray said taxes and restrictions on exports help ensure domestic supply and that further tax cuts would be detrimental.

"They are confusing 'barriers' with controls," Echegaray said of exporters pushing for changes in agricultural policy.