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December 31, 2020

Export Taxes on Argentina Soybeans back to 33%

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

As 2020 comes to a close, farmers in Argentina have a lot of things to worry about. The weather thus far this growing season has been problematic, a prolonged strike at Argentine ports has disrupted their marketing plans, the Argentine economy is struggling to remain afloat, and now taxes on grain exports will increase the first of the year.

Back in October, the Fernandez administration lowered the commodity export taxes somewhat in an effort to spur more farmer sales of their 2019/20 grain production. The soybean export tax was lowered from 33% to 30%, but it has been gradually rising since then. The tax increased to 31.5% in November, 32% in December, and now it will be 33% on January 1st. The soybean meal tax will go from 27% to 30% in January and soybean oil will go from 28% to 31%.

Their effort to increase farmer sales generally failed because the temporary tax reduction was not enough of an incentive for farmers to let go of their grain, which they view as a hedge against inflation and a potential devaluation of the Argentine peso. The government has been resisting a significant devaluation of the Argentine peso because a weaker currency would make it even harder to pay back their staggering debts.

The prior administration of Mouricio Macri had been gradually reducing the export taxes, but that process was interrupted by the worsening economic situation in the country. The tax had been lowered to 24.7% for soybeans and 6.7% for corn and wheat. Export taxes on agricultural commodities is one of the primary sources of revenue for the government.

Increasing the export taxes was one of the first actions taken by the Alberto Fernandez and Cristina Kirchner administration in an effort to shore up the country's finances.