October 5, 2020

Argentinian agricultural body says government's grains tax cuts insufficient

Argentina's Liaison Commission of Agricultural Entities, which incorporates the four main farming bodies, said government measures to impose export tax cuts on grains failed to address local farmers' issues as the country faces an economic crisis and strict capital controls, Reuters reported.

The country's centre-left government announced it will cut soybean export levy by 30% to boost sales and bring in foreign currency, though it will return to 33% by January next year.

Export taxes for soymeal and soy oil will also be cut to different levels starting at around 28%, increasing to 29.5% in November, 30% in December and 31% in January, under the plan.

However, farmers and analysts said the announcement may not be sufficient to increase selling by farmers and generate the country's much needed export dollars as the Argentinian government moves towards into debt renegotiation talks with the International Monetary Fund.

The Liaison Commission of Agricultural Entities said the lack of dollars was because of poor export policies, focusing on tax collection but discouraging growth of exportable production.

The farm body said it was not consulted on the tax cuts, adding that the temporary cuts will not help farmers it will only benefit grain processors rather than growers.

CIARA, Argentina's soy crushing companies' chamber concurred that the tax cuts were insufficient.

The chamber said it maintains that export taxes and restrictions on grains and their derivatives distort the market.

The Argentinian government is concerned over farmers holding back on their soy harvests, as the biggest exporter of processed soy faces dwindling foreign currency reserves because of the COVID-19 pandemic, in addition to a low confidence in the Argentine Peso as the country moves to a third straight recession year.

Argentina's agricultural industry has clashed with previous governments over taxes, with Alberto Fernández, Argentina's current President resigning from his position as then chief-of-staff in 2008 over a tax increase dispute with the industry.