News in brief:
– Argentina has reduced export taxes on key crops like soy and corn to support farmers facing drought and low global prices while boosting export revenues.
– The temporary relief aims to stabilise the economy and enhance the competitiveness of Argentine agriculture ahead of the midterm elections.
Argentina has introduced significant tax cuts on major crop exports to support farmers grappling with a severe drought and low global commodity prices. The move aims to bolster agricultural profitability and stimulate export revenues, critical for the country’s economy.
President Javier Milei’s administration reduced export tariffs on soy meal and oil from 31% to 24.5%, unprocessed soybeans from 33% to 26%, and corn from 12% to 9.5%. Tariffs on other key crops, including wheat, barley, and sunflowers, were also lowered.
The tax relief, effective from January 27 through most of the harvest season, will revert to previous levels in July, incentivising farmers to sell crops quickly and strengthen central bank reserves.
Argentina is a leading global exporter of soy meal, soy oil, and corn, making these changes highly impactful on international markets. Following the announcement, soy meal futures in Chicago dropped 3.3%, while soybean and corn prices fell 1.8% and 1.3%, respectively.
Economy Minister Luis Caputo emphasised the government’s solidarity with farmers, stating that they are seeking justice for them. The tax reductions serve as a temporary relief mechanism, compensating for the financial strain caused by a strong peso, high inflation, and global price pressures. However, the administration cannot afford a permanent removal of export levies, as agricultural exports contributed $5.4 billion to Argentina’s treasury in 2023, a report says.
The policy change also aims to boost the competitiveness of Argentine exports against rivals like Brazil, providing a much-needed lifeline to farmers operating at a loss.
“This is crucial for farmers at a time when global prices are low and there are regions suffering a bad drought. I hope it rains,” agricultural chief Sergio Iraeta says, highlighting the urgency.
With midterm elections approaching, the tax cuts reflect a strategic effort to stabilize the economy and address farmers’ immediate challenges.
