Argentina’s farm lobby slams “insufficient” grains tax cuts
Argentina’s main farm association says that government measures to temporarily cut export taxes on grains were inadequate and fail to address underlying issues facing farmers.
5 October 2020
6 minute read
By: Reuters reports that the furore over the export tax cut comes amid a grave economic crisis and strict capital controls for Argentina.
The centre-left government said on Thursday 1 October it would cut the export levy on soybeans by 3 percentage points to 30 percent to stimulate sales and bring in much-needed foreign currency. The levy would rise again to 33 percent by January 2021.
Soymeal and soy oil levies would be cut further to various levels, also rising again incrementally in coming months.
Farmers in Argentina, the world's top exporter of processed soy, have held back on selling their soy harvests, a concern for the government as foreign currency reserves dwindle amid the coronavirus pandemic. There is also low confidence in the peso as the country heads for its third straight year of recession.
Argentina is also just emerging from a sovereign default after restructuring over $100 billion in foreign-currency debt.
The Liaison Commission of Agricultural Entities, which incorporates the four main farming bodies, called the government's plans "insufficient" and "isolated measures, which look like patches" rather than a comprehensive strategy.
"The lack of dollars is a consequence of the terrible export policies that have been taken, looking only at tax collection and discouraging growth of exportable production," it said in a statement, adding it had not been consulted on the measures.
Argentina's powerful farm sector has clashed with various governments before over taxes. Current President Alberto Fernández resigned from his position as then chief-of-staff in 2008 amid a fierce dispute with the industry over tax hikes.
The farm body said the temporary reduction of some taxes was of little help to farmers themselves, who have said many of the benefits will be soaked up by grain processors rather than growers.
Argentina is the world's largest exporter of soybean meal and oil and the third-largest of unprocessed soybeans. The commodity crop is a key component of livestock feed.
