Argentina hikes export tax on soy oil, meal to combat inflation
Argentina has raised the export tax rate on soy oil and meal by two percentage points to 33% until the end of the year in a bid to combat domestic inflation, the government said in the official gazette on Saturday.
The South American country is the world’s top exporter of processed soy oil and meal. The government has declared a “war” on inflation, which is running at above 50% annually.
The decree undid a tax reduction announced in late 2020 by the current government of centre-left President Alberto Fernandez, and means that processed soy products will be taxed at the same rate as raw soy beans.
Fernandez said these changes were necessary in part because of Russia’s invasion of Ukraine, which has upended markets for agricultural supplies.
“The new international context forces us to take urgent measures that help stabilize domestic prices of essential products,” the decree announcing the measure said.
The oilseed industry chamber CIARA said it was analysing potential legal challenges to the tax hike.
This measure “clearly punishes the industrialization of Argentina,” Gustavo Idrogras, head of the CIARA-CEC grains exporting chamber, told Reuters. “This will severely affect all of the soy chain.” Agrobusiness has had a tense relationship with Fernandez and previous administrations governed by his Peronist party because of their tendency to intervene in the market.
“This creates a climate of uncertainty and lack of confidence… I think it’s heading toward a national protest,” said Jorge Chemes, head of the Argentine rural confederation CRA.
Export taxes are an important part of Argentina’s overall tax revenue. Exports of wheat and corn, two other pillars of local agrobusiness, are taxed at 12%.
Separately, the International Monetary Fund’s executive board will meet on March 25 to discuss Argentina’s request for a debt deal, an IMF spokesman said on Saturday.
Argentina’s Senate voted on Thursday to approve a $45 billion debt deal with the IMF, converting the agreement into law and ensuring that the economically battered country can avoid another messy default.
The deal still needs to be signed off by the IMF’s board. The IMF spokesman, Gerry Rice, said in a statement that “the legislative approval is an important signal that Argentina is committed to policies that will encourage more sustainable and inclusive growth.”
Argentina’s inflation accelerated in February at its fastest pace in nearly a year, surpassing forecasts and challenging the government’s targets for this year in its preliminary agreement with the International Monetary Fund.
Consumer prices rose 4.7 percent last month compared to January, above the 4.3 percent median estimate by economists in a Bloomberg survey. It was the fastest monthly inflation since last March and the third straight increase in the pace of price gains.
Food led all categories, jumping 7.5 percent from the previous month, with lettuce prices up 73 percent over that period. The data still doesn’t reflect the full economic impact of Russia’s invasion of Ukraine on global commodity prices.
rom a year ago, inflation reached 52.3 percent, according to data from the INDEC national statistics institute published Tuesday, compared to a 51.7 percent estimate.
China’s imports of soybean up: China’s soybean imports from Brazil in the first two months of 2022 rose significantly from the corresponding period last year, customs data showed on Sunday.
The world’s top buyer of soybeans, China brought in 3.51 million tonnes of the oilseed from Brazil, up 241% from 1.03 million tonnes in the previous year, data from the General Administration of Customs showed.
Rains in Brazil last year delayed the harvest and exports from the South American country, China’s top soybean supplier.
This year, drought slowed the harvest and shipments in Brazil, tightening soybean supplies in China, forcing many crushers to shut operations and pushing meal prices to record highs.
Soybean arrivals were still larger than the previous year, however, the data showed.
China also brought in 10.04 million tonnes of soybean from the United States in the first two months, down 16% from 11.9 million tonnes a year ago, according to customs data.
Early in 2021, it stepped up purchases of US farm goods to fulfil its commitment in the initial trade deal the two countries signed in January 2020.
Crushers did not book large volumes of US soybeans late last year as they waited for cheaper and earlier Brazilian beans.
The drought in South America has pushed up premiums on shipments from the region, however, prompting Chinese buyers to turn to US cargoes.