Argentina suspends exports of soybean meal and oil

Argentina, the world's leading supplier of soybean meal and oil, suspended exports of these products, the main ones in its export basket, amid rising prices in the international market.

While producers remain alert to a possible increase in taxes on foreign sales.

The measure, which shall apply “until further notice”, consists of the closing of trade records, which in practice blocks sales. This is in the context of the rise in commodity prices internationally due to the war between Russia and Ukraine.

The Liaison Table, which brings together four organizations of rural entrepreneurs, issued a statement in which it repudiated the decision and said that “recent history marks that, after this type of measures, a new withholding scheme comes. For these reasons, we call on the legislative political forces to put an institutional order on export tax legislation.”

- Millions at stake -

According to 2021 data, soybean meal was the main export product of the South American country (14.2%) and soybean oil, the third (6.9%).

Industry sources believe that the temporary suspension of exports will serve to raise taxes on foreign sales of these products from 31% to 33%.

“It is a measure with a more tax effect, of collection for Argentina, than of limiting exports. We estimate that a two-point increase (in export withholdings) will mean an additional $450 million in 2021,” market analyst Dante Romano told AFP.

“The closure to exports is done to prevent businesses from being registered before the tax change. But it should last a short time and should not affect the international market,” said Romano.

Shipments of these already committed products will normally continue as registration procedures are carried out one to two months in advance.

In 2021, the soy complex accounted for 30% of Argentine exports and contributed about $9 billion in export taxes to the tax authorities.

Unlike other products for human consumption, such as wheat, corn and beef, in Argentina there is no limitation on the quantities of soy destined for the foreign market.

Alberto Fernández's centre-left government is studying measures to mitigate the international rise in the price of wheat, which caused a sharp increase in the price of bread and other derivatives in the domestic market.

To this end, it created an Agri-Food Countercyclical Fund for 25 million dollars to contain prices and decouple them from quotations on the international market.

Argentina, among the world's leading food producers, is benefiting from the international rise in the price of raw materials. But strong demand puts pressure on domestic food prices, one of the items that has the greatest impact on inflation, which was 50.9% last year.

Pedro Peretti, former head of the Agrarian Federation, considered that an increase in the tax on exports of soybean meal and oil “can be very useful if the wheat trust is capitalized.”

“If it's for people to eat, it makes sense, if it's to reduce the fiscal deficit it doesn't make sense,” he said in a radio interview.

Last year, in the midst of an escalation in the domestic price of beef, the government had also appealed to the reduction of exports as a variable to adjust domestic prices, in addition to agreeing with refrigerators cuts at popular prices.

at-nn/mr/ag