Argentina cuts soy export tax rate in bid to boost FX reserves

BUENOS AIRES (Reuters) - Argentina has temporarily cut soybean export taxes by 3 percentage points to 30% to help stimulate trades, the government announced, as the country struggles with recession and dwindling foreign reserves.

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Processed soymeal and soy oil levies will temporarily be cut to varying rates starting at around 28%, according to a detailed breakdown of the tax rates made available by the Economy Ministry on Friday. All the rates would then rise again incrementally until January.

“We are seeking to strengthen the country’s international reserves,” Economy Minister Martin Guzman said at an event in Buenos Aires to announce a wider raft of economic measures.

But farmers and analysts said the move might not be enough to significantly boost selling by growers and generate much-needed export dollars as the government heads into debt renegotiation talks with the International Monetary Fund.

Soybeans are the main cash crop of Argentina. The country, also a major exporter of corn and wheat, is the world’s top supplier of soymeal livestock feed used to fatten hogs and poultry from Europe to Southeast Asia.

Soyoil and soymeal export taxes, which had been at 33%, will fall to 28% in October, then rise to 29.5% in November, 30% in December and 31% in January, under the plan.

Argentina’s CIARA soy crushing companies’ chamber issued a statement late on Friday calling the tax cut plan insufficient.

“CIARA has always held the position that all export taxes and restrictions on grains and their derivatives are distorting to the market. We would support a schedule for the reduction and elimination of such duties,” the statement said

Santiago del Solar, a farmer in the bread-basket province of Buenos Aires, said he expected buyers to take advantage of farmers rushing to market during the three-month tax cut window.

“Everyone knows we want to sell during these 90 days, including the buyers. They will lower the prices they offer during these three months, so the benefit of the tax reduction will never reach the farm,” del Solar said.

Argentina’s economy, which has been shrinking since 2018, has been dented further by the lockdown against the coronavirus pandemic in place since March. So far 20,599 Argentines have died from COVID-19, according to the Health Ministry.

The central bank last month tightened capital controls in a bid to shore up reserves as Argentines dump the local peso currency in favor of safe-haven U.S. dollars.

Last year Argentine soy and its derivatives fetched $15.7 billion in export dollars.

Argentine farmers have sold 32.2 million tonnes of soybeans from the 2019/20 season, about 60% of the harvest and 4.4 million less than sales registered at the same point in the previous year, according to official data. The 2020/21 crop will start being planted later this month.

Reporting by Hugh Bronstein, Eliana Raszewski and Maximilian Heath in Buenos Aires; Editing by Alistair Bell, Leslie Adler and Sonya Hepinstall