MercoPress. South Atlantic News Agency

Argentine governors call for lower taxes on farm exports

Governor Juan Schiaretti

Cordoba and Santa Fe, two big farming provinces in Argentina, are calling on the federal government to suspend crop export taxes for three to six months to help farmers in the face of the worst drought in decades.

Cordoba Governor Juan Schiaretti is suggesting a three-month suspension in export taxes followed by a five to 10 percentage point cut in the rates, which run as high as 35% on soybeans, reports the Buenos Aires media. "The international context is not the same as when there was the exporting bubble," Cordoba Agriculture Minister Carlos Gutierrez told the newspaper Clarin. "Today the farm is living another reality, so we should adapt ourselves to this reality. We have told (Argentine President Cristina Fernandez de Kirchner) that a cut in the export taxes on soybeans will help put back on track the productive wheel" of the sector. On Sunday Santa Fe Governor Hermes Binner suggested he will ask the national government to suspend the export taxes on beef, cereals, milk and oilseeds for six months, the local press reported. He also wants the Kirchner administration to eliminate the value-added tax on basic agriculture-based products like beef, bread, chicken, eggs and milk to boost consumer demand and help increase sales in the drought-beleaguered sector. Argentina is suffering its longest dry spell in decades, with many parts of the farm belt so far this year posting the lowest precipitation in 47 years. The reduction has been between 40% and 60% as compared with historic averages, according to the Buenos Aires Cereals Exchange. According to the latest estimates, the farm sector has lost 2.7 billion US dollars in crops and other products because of a cut in planted area and lower crop yields, as well as slower fattening rates and the death of an estimated 600,000 heads of cattle. Many agriculture analysts expect the total harvest for the 2008-09 season to come in at 80 million metric tons, down from 95 million in the previous season. For soybeans, the country's biggest crop, the drought has led to regular cuts in production estimates, with the latest from the Buenos Aires Cereals Exchange suggesting output from the 2008-09 crop may drop by 17% to 25% to between 34.5 million to 38.2 million tons from 46.2 million tons out of the 2007-08 season. A reduction in the tax - particularly on soybeans - has been a main request of farmers over the past years. But the Kirchner administrations have not given any indications that it will do this, according to sources in the Buenos Aires media. Farmers last year held a four-month protest against a hike in the soybean export tax, what ultimately led to an overturn of the increase so that it remained at a fixed rate of 35%. The government depends heavily on the farm sector and export duties to provide it with tax revenue. Argentina is the world's third-biggest exporter of corn and soybeans and first for soymeal and soyoil and fourth for beef. Binner and Schiaretti traveled to Mexico Monday with executives of farm machinery companies, who are looking to expand exports in the face of a slowdown in Argentina because of the drought. In Mexico, the governors are slated to meet with Argentine Agriculture Secretary Carlos Cheppi to discuss taxes and measures to help the farm sector, local press reported. Last week, Mrs. Kirchner declared an "agricultural emergency" and said farmers and ranchers hit by the drought will be able to defer personal income and other tax payments for up to a year and temporarily won't have to pay for the right to transport grains and oilseeds. These followed other measures including a cut in slaughter weight requirements for beef cattle.