Argentina to cut soybean export duties in Q4 to accelerate sales

Argentina’s government is expected to announce a package of measures on Thursday to try to incentivise farmers to accelerate grain sales during the final quarter of the year.

According to sources with knowledge of the matter, the government will announce a reduction in soybean export duties from 33% to at least 30% for a 90-day period.

One of the sources told Agricensus that the sector had asked the government to reduce soybean export duties for up to 12 months, but the government had not accepted the request.

The source added that government officials at the Economy Ministry had held at least two meetings with representatives of grain exporters to try to agree a scheme to boost grain exports, but negotiations had stalled.

“The sector did not reach an agreement with the government and the government will announce its own package of measures with the aim of boosting sales. It seems that following this announcement, the government will probably continue negotiations with the industry,” the source said.

The move by the government aims to bolster the Central Bank’s international reserves with fresh funds at a time when the entity has had to implement strict foreign exchange controls to avoid a further deterioration in the level of reserves.

According to a trade source, farmers still have approximately 16 million mt of soybeans in their possession.

Producers hold on to soybean stocks as they expect a further devaluation of the local currency against the US dollar. They are also negatively impacted by a gap in current forex controls.

"A decision to temporarily reduce soybean exports, if it is not accompanied with a reduction in the overall tax burden for rural producers, will not make farmers  accelerate sales," Jorge Chemes, head of rural entity CRA, told Agricensus.

The source also confirmed that the government will also announce a compensation scheme for small soybean producers, which had been previously announced by the government but never implemented.

In March 2020, the government increased export duties for soybeans to 33%, but only for farmers producing over 1,000 mt of soybeans.

Under the new scheme, those producers harvesting between 500 mt to 1,000 mt continue to pay the old duty of 30%, while farmers with an output of less than 500 mt in a crop cycle will pay an export duty ranging from 21% to 29%.

The lower level of export duty will be paid by those farmers harvesting less than 100 mt of soybeans.

At the time of the implementation of this new export duty scheme, the government said that smaller soybean producers will end up paying lower duties through the compensation scheme.

Trade sources also told Agricensus that they expected a wider package of duty cuts to cover exports on soyoil and soymeal, but details could not be confirmed by time of publication.

The government is expected to announce the change at a press conference scheduled for 1700 local time on Thursday, October 1.