Argentina temporarily cuts soy export taxes in bid to boost foreign reserves

Argentina temporarily cuts soy export taxes in bid to boost foreign reserves

01/10 - 20:30 - Argentina has temporarily cut soybean, soymeal and soyoil export taxes by 3 percentage points to 30% to help stimulate export revenue, the government announced on Thursday, as the country struggles with recession and dwindling foreign reserves.

The tax cut will last until the end of the year before being restored to 33% in January. “We seek to strengthen the country’s international reserves,” Economy Minister Martin Guzman said in a televised address.

But farmers and analysts said the move might not be enough to significantly boost selling by growers and generate much-needed export dollars as the government heads into debt renegotiation talks with the International Monetary Fund.

Soybeans are the main cash crop of Argentina. The country, also a major exporter of corn and wheat, is the world’s top supplier of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia.

“The reduction of duties will lead to an improvement in producer prices,” said Gustavo Idigoras, head of Argentina’s CIARA-CEC export companies’ chamber. “It is not enough, but it is on the right path of lowering the enormous tax burden that is on the soy chain.”

Santiago del Solar, a farmer in the bread-basket province of Buenos Aires, was less optimistic. He said he expected buyers to take advantage of farmers rushing to market during the three-month tax cut window.

“Everyone knows we want to sell during these 90 days, including the buyers. They will lower the prices they offer during these three months, so the benefit of the tax reduction will never reach the farm,” del Solar said.

Argentina’s economy, which has been shrinking since 2018, has been dented further by the lockdown against the coronavirus pandemic in place since March. The central bank last month tightened capital controls in a bid to shore up reserves as Argentines dump the local peso currency in favor of safe-haven U.S. dollars.

Last year Argentine soy and its derivatives fetched $15.7 billion in export dollars.

Argentine farmers have sold 32.2 million tonnes of soybeans from the 2019/20 season, about 60% of the harvest and 4.4 million less than sales registered at the same point in the previous year, according to official data. The 2020/21 crop will start being planted later this month. (Reporting by Hugh Bronstein, Eliana Raszewski and Maximilian Heath in Buenos Aires Editing by Alistair Bell and Leslie Adler)

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