MercoPress. South Atlantic News Agency

Argentine farmers fearful of higher export taxes

Argentina seems to be heading for a record crop of 100 million tons, five million more than the 2006/07 record, and with even higher prices, in money terms this could mean an overall additional four billion US dollars.

Although farmers are enthusiastic about the prospect, they are also concerned with costs, short supply of certain inputs and a general temptation, including from the government, to get a big bite from that additional lump of money. "For different reasons strategic supplies for the camp have suffered significant increases in recent months", says Ernesto Ambrosetti, economist from the powerful Argentine Rural Society. Compared to a year ago, the herbicide most commonly used, glifosato has gone up 98%; urea in grains for fertilizing 43%, seeds 20% and wholesale diesel in the camp costs up to 50% more than retail in Buenos Aires city. However the Cereals Stock in Buenos Aires points out that the price for the coming wheat crop has soared 51%; corn, 27%; soybeans, 35% and sunflower, 100%. In money terms if the 95 million tons of the last crop represented almost 15 billion US dollars, this year the total could jump to 20 billion US dollars. But farmers argue that direct costs for corn have increased 20.5% and for wheat, 60%. Besides as a consequence of the energy crisis in Argentina, fuel supply is scarce and so is the production of fertilizers and agro chemicals. Transport and grain handlers have anticipated they are also planning to reap into the bonanza with higher rates. But what really scares farmers associations is the Argentine government, which already collects over three billion US dollars on cereal and oil seeds exports and some economists are warning that a further "contribution" could be demanded to help restore the budget surplus, skimmed by the electoral campaign, and to continue financing the generous subsidies for certain items that are essential in ensuring that the consumer price index remains "tolerable" and below the two digits. Some of the domestic market items subsidized by the Argentine government include cooking oil, dairy products, poultry and hogs In cooking sunflower oil the subsidy is equivalent to 60 US cents per liter on a retail sale price of 1.50 US dollars. A Buenos Aires private think tank which keeps tract of funds spent on subsidies estimates that last year the bill climbed to 1.4 billion US dollars and this year could be in the range of 1.7 billion US dollars.