Argentina's new government, in a widely anticipated move, raised taxes on corn, wheat and soybean exports in order to meet the country's fiscal requirements, according to an official gazette released Saturday, but this is expected to hit farmers and export volumes.
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Register NowThe new government closed export registrations for December 16, and announced the export tax increase, an Argentina-based analyst told S&P Global Platts.
Taxes on corn and wheat exports were raised to 12% from 6.7%, while taxes on beans, soybean oil and soybean meal shipments were increased to 30% from 24.7% earlier, according to another analyst.
Markets are waiting for an official statement to get more clarity, including when the new taxes will take effect.
According to one analyst's interpretation earlier, taxes on corn and wheat exports were increased to 9%, while soybeans were at 27%.
The Argentina-based analyst expects the higher tax to impact farmers' planting intentions, and possibly reduce fertilizer applications and quality of seeds.
In anticipation of the increase in export taxes, farmers and traders were selling grains at a rapid pace before the new government took charge on December 10. Argentina shipped 230,000 mt of wheat in October, and 700,000 mt in November, the Argentina-based analyst said, adding that December wheat shipments should be aggressive at 2.5 million-2.8 million mt.
Key players in Argentina's agricultural sector were already expecting the Alberto Fernandez-led government to make changes to the tax regime, which are expected to affect the grains and oilseeds exports out of the country.
"Farmer organizations of course didn't like [the tax increase], but some farmers believe the impact from the current system is not big. For industry players, [it] was widely expected, [but] no clear ideas [of the impact] for the moment," the Argentina-based analyst said.
Argentina's wheat harvest started in October, while the new marketing season began in December and will run through November 2020.
Argentina's agricultural sector is a major contributor to the country's economy. Corn and wheat contribute around 7.4% and 3.3%, respectively, to Argentina's export revenues.
It is also the world's sixth-largest wheat exporter and third-largest corn exporter, according to the US Department of Agriculture.
-- Rohan Somwanshi, rohan.somwanshi@spglobal.com
-- Edited by Geetha Narayanasamy, newsdesk@spglobal.com