MercoPress. South Atlantic News Agency

Argentina lowers export taxes on soy for three months, hoping farmers will sell their crops

Soybeans are the main cash crop of Argentina. The country, also a major exporter of corn and wheat, is the world's top supplier of soymeal livestock feed

Argentina plans to temporarily cut soybean and soy meal export taxes by 3 percentage points to 30% to help stimulate export revenue as the country struggles with recession and dwindling foreign reserves, it was announced on Thursday.

The powerful Argentine Rural Confederation, one of several farmers associations said the measures were unilaterally elaborated and announced since no rural organization had been consulted.

The tax cut would last until the end of the year. The export levy would be restored to 33% in January, as part of the government's plan to collect all possible dollars. The government is working on different measures but there has not been any negotiations with the farm sector in this regard.

”They will reduce export taxes by 3% (points) for the rest of this year and restore export taxes to their current levels in January,“ farmers sources said, recalling previous promises yet to be honored. ”The government is expecting that this will induce farmers to increase selling but we are not sure about that.”

Argentina's GDP has been shrinking since 2018, after almost a decade of stagnation, and has been dented further by a lockdown against the coronavirus pandemic first implemented by the government in mid March.

The central bank has tightened capital controls in a bid to shore up reserves as Argentines dump the local peso currency in favor of safe-haven U.S. dollars.

Soybeans are the main cash crop of Argentina. The country, also a major exporter of corn and wheat, is the world's top supplier of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia. Last year Argentine soy and its derivatives fetched US$15.7 billion in export dollars.

Argentine farmers have sold 32.2 million tons of soybeans from the 2019/20 season, about 60% of the harvest and 4.4 million less than sales registered at the same point in the previous year, according to official data. The 2020/21 crop will start being planted later this month.

The fact is that with a 90% gap between the official exchange rate (some 80 Pesos) and the black market (some 145 Pesos) for the US dollar, plus the levy, farmers receive at the most 60 Pesos for the greenback.