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Argentine farmers begin four day sales strike to protest higher export taxes

Monday, March 9th 2020 - 08:57 UTC
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The government on Thursday increased export levies on soybeans, soymeal and soyoil to 33% from 30% The government on Thursday increased export levies on soybeans, soymeal and soyoil to 33% from 30%

Argentina’s main farm groups will hold a four-day sales strike this week, officials with local growers groups said on Thursday, to protest a tax hike that soy crushing companies warn will cripple investment in the key sector.

Adding to the problems attacking the backbone of Latin America’s third-biggest economy, farm analysts said dryness was starting to hurt what had until last week appeared to be promising soybean yields as harvesting was set to get underway.

The government on Thursday increased export levies on soybeans, soymeal and soyoil to 33% from 30%. The move was part of President Alberto Fernandez’s plan to make the country solvent after announcing it will have to revamp about US$ 100 billion in what it calls unsustainable debt.

“Sales will be suspended for four days starting on Monday,” a spokesman for the Rural Confederations of Argentina, or CRA, announced. A source with the group later said the country’s other three main farm organizations would join the sales strike.

Carlos Iannizzotto, president of growers association Coninagro, told local radio on Thursday that the strike would see the “cessation of trade in grains, mainly soy”.

Argentina’s CIARA soy crushing companies chamber meanwhile warned that the tax hike, which went into effect on Thursday, would give an advantage to Argentina’s international competitors at a time when the country desperately needs export dollars.

Growers in the country are expected to produce 54.5 million tons of soybeans this season, according to the Buenos Aires Grains Exchange. Harvesting of soy and corn, Argentina’s two biggest cash crops, starts this month.

Lack of rain and the high temperatures over recent days have quickened the loss of ground moisture in key growing areas, the Buenos Aires Grains Exchange said in a weekly crop report.

“Under this scenario, the possibility of any increases in production are ruled out,” the report said. Independent analysts agreed.

“Rains are needed urgently. We hope to get some relief this weekend, but the yields of late-planted soy have already started to suffer,” said Gustavo Lopez, head of consultancy Agritrend.

CIARA, representing export giants like Bunge and Louis Dreyfus, wants industrialized products to be taxed at a lower rate than beans because they are more expensive to make.

Argentine wheat exports, for example, are taxed at 12% while wheat flour is subject to a 7% levy. Sunflower seed exports get taxed at 7% while sunflower pellets, used as food at fish farms, are taxed at 5%.

But as the cash-strapped government looks to increase revenue ahead of what are expected to be tough bond-restructuring talks, it is the soy sector that offers the juiciest tax take. Argentina is the world’s No. 1 exporter of soymeal livestock feed and soyoil, used in making biofuels.

“CIARA understands that the government is facing the challenge of making its external debt sustainable, but we are convinced that this must be done logically and while defending national industry,” the statement said.

 

Top Comments

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  • Enrique Massot

    The producers' lockout has had limited effects on its first day.

    The reasons cannot be understood without the context provided in another MP story published March 4 (see link below).

    The story noted the increased soybean export taxes will only reach about 25 per cent of the producers -- the largest ones benefiting from economies of scale and producing over 1,000 tons. Those are the only ones to pay the three-per-cent increase.

    For farmers producing between 500 and 1000 tons, the levy remains as it is now, 30 per cent.

    Farmers producing less than 500 tons annually will pay below the existing 30 per cent.

    Products such as wheat, corn, sorghum, milk, cotton, fresh fruit, wine, legumes and wine making part of regional economies will remain at around five per cent.

    That is why the lockout has had limited support from producers -- because a large majority or about 75 per cent of them are not going to have increases -- in fact, many will see a reduction in their taxes.

    https://en.mercopress.com/2020/03/04/argentina-increases-soybean-exports-tax-10-from-30-to-33-small-farmers-will-pay-less

    Mar 09th, 2020 - 07:22 pm 0
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