MercoPress. South Atlantic News Agency

Argentine oilseed crushers say they reached a deal to hold down domestic edible oil prices

The CIARA oilseed crushers chamber said the agreement on sunflower oil and sunflower-soy oil mix would help ease government concerns about inflation

Despite confusing news from Argentina following president Alberto Fernandez's announcement that he is prepared to reimpose levies on grains and oilseeds exports if food prices keep increasing, oilseed crushers said they had reached a deal with the government to hold down domestic edible oil prices.

The CIARA oilseed crushers chamber on Monday said the agreement on sunflower oil and sunflower-soy oil mix would help ease government concerns about inflation, which a central bank poll recently forecast would be about 50% this year, while the national budget presented to Congress forecasted 36%.

The situation and president Fernandez comments in a Sunday newspaper threatening with higher export taxes, triggered an immediate reaction from farmers who warned they are prepared to confront such a decision, and will be holding a meeting with government officials later this week

The chamber, which represents crushers that drive the country’s huge processed soy export sector, gave no details on the pricing pact. But the group said this could help avert higher export taxes on members’ products, though farmers cautioned that taxes on other crops remained a threat.

“In this way, the tightening of exports logs and export duty hikes are avoided,” CIARA said, citing commitments by the government to avoid distortion in the export market.

Argentina is the biggest global exporter of soybean oil and feed. It is the No. 3 exporter in corn and is also among the leading suppliers of wheat.

In recent months, international commodity prices have reached their highest levels in years. While this benefits Argentina’s fiscal coffers and reserves, the government has pointed to the trend as a factor driving up domestic prices and inflation.

The government last month moved to restrict corn exports with the aim of limiting increases in meat prices, though it walked back that decision after strong criticism and a commercial strike by the main rural associations.

Over the weekend, President Fernandez again threatened to raise taxes or impose quotas on the farming sector if no solution was reached. It was unclear whether the agreement on edible oils would defuse that threat entirely.

Argentina’s four main farm groups released a joint statement saying they were “dismayed” by Fernandez’s weekend comments.

“The recipe of attacking price increases with instruments as destructive as export duties or quotas has been used before and decimated production and exports,” the farm groups said.

“If we move in this wrong direction, a new conflict with the farm sector would break out,” they added. The government announced that Fernandez will meet with farm leaders at the Casa Rosada presidential palace on Wednesday.

Argentina’s agricultural sector has long had a turbulent relationship with the president’s Peronist movement, especially during the administration of Cristina Fernandez de Kirchner between 2007 and 2015. She is currently vice president.

Wheat and corn exports are taxed at 12%, while soybean grain shipments are taxed at 33% and their derivatives at 31%. Unlike in previous Peronist governments, there are no export quotas for crops or meat.