July 9, 2008

 

Argentina's corn planting to fall as soy tax gains traction

Argentine corn planting is expected to fall next season as tax exemptions for small and medium scale soy growers are likely to spur greater soy area, the corn association, Maizar, said in a news release Monday (July 8, 2008).

 

The House of Representatives ratified the president's controversial soy export tax scheme Saturday.

 

A controversial soy export bill by Argentine President Cristina Fernandez was put to vote on the House after it sparked months of farm strikes earlier.

 

In introducing the bill in March, President Cristina Fernandez said the tax would act as a disincentive to soy planting, as the crop was displacing domestically consumed goods such as wheat, corn and cattle pastures.

 

However, in order to secure the votes needed to pass the bill, the scheme was modified to exempt more small and medium-scale soy producers from the new tax.

 

This meant more small-scale and medium scale soy producers would be farming soy since other crops remained at high tax levels, defeating the purpose of the soy tax in the first place.

 

Soy is planted on more than half of the fields sown in Argentina each year and production has soared over the past decade. Argentina is the world's top soymeal and soyoil exporter and is the world's third largest soy exporter after the US and Brazil in soy shipments.

 

As legislators debate the soy export tax, the tax on corn exports has risen sharply due to soaring international corn prices. While small-scale soy growers will face a 30 percent export tax, they face a 36 percent export tax on corn, Maizar said.

 

Even though corn prices are high, farmers may ultimately choose to plant soy due to the lower level of fertilizer required.

 

Argentina is one of the world's top corn exporters.