Argentina's business friendly president Mauricio Macri, announced on Monday large tax cuts on agricultural exports and emphasizing that the camp was essential to get Argentina back on its feet. Macri, who took office Thursday, had promised to slash the steep taxes on agricultural exports, which triggered major protests by producers against former president Cristina Fernandez administration.
Export taxes will be eliminated altogether for wheat, corn and sorghum, and for soybeans the tax will drop from 35% to 30%, confirmed Agriculture Minister Ricardo Buryaile. Taxes on wheat and corn exports were previously 23% and 20%, respectively.
I am going to sign the decree today, Macri said in a speech to farmers in the town of Pergamino, in the heart of the Argentine Pampas, the fertile plains that are the national breadbasket.
The steep taxes had been introduced in 2008 under president Cristina Fernandez with the purpose of more resources for her administration's social welfare (and voters) oriented policies. Protests over the steep rates paralyzed the agriculture sector that year and turned into a crisis for her government.
Farmers accused Cristina Fernández of saddling the agricultural industry with an unfair share of the national tax burden, hurting their international competitiveness.
Macri vowed those days were over. Let's not think of things in terms of 'farms or industry,' he said. It's farms and industry, farms and the country. Without farms, the country can't survive.
Argentine farmers reacted to Cristina Fernandez tax policies by hoarding their crops in hopes of more favourable conditions. They have an estimated 17 million tonnes of soybeans, 20 million tonnes of corn and 10 million tonnes of wheat in stock.
But outside Argentina, markets have been wary of what Macri's victory will mean for already low global prices for agricultural commodities. Argentina is the world's third-largest producer and exporter of soybeans, after the United States and Brazil, and the largest producer of soy products.
The country vies with Ukraine for the title of third-largest corn exporter, and is the seventh-biggest wheat exporter.
The announcement is the first of the economic reforms promised by Macri, who has vowed to overhaul Cristina Fernandez' legacy of hands-on economic management, including protectionist import controls, heavy taxes on agricultural exports and an official exchange rate.
With foreign reserves in the Central bank precariously low, Macri urgently needs farmers to start exporting their hoarded crops -- a key source of hard currency. Agricultural exports are expected to total $25 billion this year, a third of Argentina's total exports.
Macri encouraged farmers to grow even more and ramp up production of processed products. We can double Argentina's food production, he said, calling for more corn, more beef, everything we're capable of.
Farmers estimated they could increase their corn and wheat crops by at least 30% next year.