Hebei Lansheng Biotech Co., Ltd. ShangHai Yuelian Biotech Co., Ltd.

Argentina suspends export tax reductions on soybean meal and oilqrcode

Aug. 16, 2018

Favorites Print
Aug. 16, 2018

The Argentine government announced two measures yesterday that could significantly impact farmers in Argentina as they prepare for their 2018/19 growing season.
The first measure was the government's decision to suspend for six months the gradual reduction of export taxes on soybean meal and soybean oil as a way to increase revenue and cut costs. At the start of 2018, the export tax on soybeans was 30% and the export tax on soybean meal and soybean oil was 27%. That differential in tax rate has been in place in Argentina for many years as an incentive for crushers to process soybeans instead of just exporting the soybeans. The incentive worked and Argentina became the largest soybean meal and soybean oil exporter.
Since January, the tax on all three products has been declining 0.5% per month. Therefore, if the tax on soybeans is allowed to continue declining until the end of the year, then by the end of 2018, the export tax will be 23% for soybeans, soybean meal, and soybean oil. This would not be good news for crushers who used this tax deferential as their margin.
The other measure announced by the government yesterday was to increase the prime interest rate in Argentina to 45%. The increase was an effort to defend the currency against further weakening especially in light of the currency situation in Turkey.
This is bad news for farmers who need to borrow money to plant their next crop. It is especially problematic this year because many farmers are coming off a disastrous 2017/18 crop production. The worst drought in decades left many farmers "under water" financially making them even more dependent on burrowed money to plant their 2018/19 crops.
The "sky high" cost of burrowing could force farmers in Argentina to plant more soybeans and less corn in 2018/19. Soybeans are much cheaper to plant compared to corn and if a farmer is in financial difficulty, he could take drastic measures to lower his costs even more.
A farmers could plant his own soybean seed to lower cost and he could forgo fertilizer applications to lower the cost even more. Those two options are not available for corn producers. Farmers must purchase new seed corn every year although he could opt for a cheaper hybrid. Corn production is also heavily dependent on the amount of fertilizer applied. If you cut back on fertilizer rates, it is a guarantee that the corn yield will suffer.
The trend over the last several years in Argentina has been to reduce soybean acreage in favor of more corn, but that trend could be reversed in 2018/19. Having said that, the financial situation in Argentina is very much in flux, so what is predicted today may not be correct tomorrow.


More from AgroNewsChange

Hot Topic More

Subscribe Comment


Subscribe Email: *
Mobile Number:  





Subscribe Latin America Focus Bi-weekly to send news related to your mailbox