more soybean hectares this season?

Buenos Aires, September 3rd. Today, a hesitant and depresed President Macri announced the re-impose a generally tax to the Argentine exports. As it was precised by minister Nicolas Dujovne, exporters will pay AR$4 for every dollar in raw materials exported and AR$3 if the export corresponds to a manufacture.

In December 2015, President Macri eliminated the export taxes, a campaing promise and a decision celebrated by farmers, who payed a 23% for corn exports and 20% for wheat ones. Only the soybean complex continued paying export taxes, initiallly reduced from 35 to 30% of the FOB value, and from 2018 decrease a half percentual point per month.

But the financial crisis that faces de government push them to take economic measures both to reduce the fiscal decifit as to improve the incomes. Some economic advisors suggested President Macri to reimplant the export taxes, waiting for collect AR$280billions next year, the half of the deficit reduction committed with the International Monetary Fund.

Considering a currency rate of AR$38 to AR$40 to dollar, the export tax of AR$4 represents between 10 to 11% of the FOB price. In the case of the corn, considering 24 million metric tons to export during 2019 fiscal year an other 13 MMT of wheat exports, FOB value would rounds US$7 billiions and therefore Goverment would collect US$700 millions.

In the case of the soybean complex, the Government dropped the tax to 18%, but adding the AR$4 per dollar, the real tax rises to 28%. Anyway, the gap between soybean (28%) and corn (11%) drops to 17%, versus previous 26% and the 30% in 2016. This situation could impulse farmers to plan more hectares of soybean instead of corn. This would be a good business for the Macri’s Administration as 95% of the soybean production is exported.

The farmers reaction was not good to the announcements. “It´s a very hard beat to farmers”, the leader of the Rural Confederation (CRA), Dardo Chiesa, said. “They (the Government) plays with our incomes, but we pay gasoil and inputs at international prices, and with a 60% annual interest rate, who pay it?”, asked himself the rural leader.

“We are very worried; this measures mainly affect the small farmer and his family”, the leader of Agrarian Federation (FAA), Omar Principe commented.

Farmers unions had supported Cambiemos, the political party of Mauricio Macri during the electoral campaign in 2015. The promise of eliminate export taxes was determinant to gain the support of farmers. But this decision erodes their favor.

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