Argentina's new president-elect, Mauricio Macri, will follow through on plans to cut the soybean export tax by 5 percentage points to 30% and sweep away restrictions on corn and wheat shipments from Dec. 10, the country's next agriculture minister, Ricardo Buryaile, told Clarin, a local daily news publication.
Buryaile said he and the rest of Macri's economic team are still looking at details with a more official announcement likely this week.
Ever since Macri won the presidential election last Sunday, there have been rumors the new administration is considering the complete elimination of the soybean export tax, currently at 35%, for a month or two in order to stimulate sales and bring in dollars.
Farmers have huge stocks of soybeans, held as a hedge against economic volatility and as a bet that the Argentine peso would be devalued. Estimates of the size of the stocks vary greatly from 6 million to 20 million metric tons (mmt).
However, the minister-in-waiting indicates that Macri will stick with the more conservative plan laid out in his electoral manifesto.
A happy-hour sell-off of soybeans would cause a number of problems. It would depress the international market, which is currently well supplied, and it would cut an important revenue source at a time when public accounts are extremely tight.
According to Macri's agriculture manifesto, the 5-point cut would be followed by further 5-point cuts in the subsequent four years of his term.
While the end of taxes and restrictions on corn and wheat shipments has been widely anticipated, Buryaile also told Clarin that meat export quotas will also be eliminated and the 15% export tax scrapped, offering relief to meatpackers.
Export taxes are only part of the equation for Argentine farmers. They are also waiting for news on when and by how much the Argentine peso might be devalued.
With the official exchange rate at $1 to AR$9.69 and the black market rate at $1 to AR$15.04, the end of capital controls would potentially give Argentine farmers a bigger boost than Macri's plan to reduce farm export taxes. However, it is uncertain whether the new president will really go for a major devaluation, inviting potentially great economic and political instability, or seek to ease controls bit by bit.
Independent of Macri's course of action, the Argentine farm sector is very upbeat with the end of the eight-year battle it has fought with President Cristina Fernandez and her administration. Macri has appointed key farm industry figures to his administration, including Buryaile and his agricultural secretary Ricardo Negri, and the sector can expect to have an active voice in policy once again.
Alastair Stewart can be reached at email@example.com
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