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January 3, 2017

Soy Export Tax in Argentina will Decline starting in January 2018

When President Macri took office in December of 2015, he instituted dramatic reductions in grain export taxes and he allowed a devaluation of the Argentine peso. The export taxes on corn and wheat were completely eliminated and the export tax on soybeans was lowered from 35% to 30%. He also said the export tax on soybeans would be lowered 5% per year until it was eliminated, but a weak economic recovery derailed the plan for a 5% reduction in the soybean export tax in 2016.

Farmers in Argentina had hoped for a quicker reduction in the soybean export tax, but they had to settle on a compromise. Starting in January of 2018, the export tax on soybeans will decline 0.5% per month for all of 2018 and 2019. During the two year period, the soybean export tax will decline from the current 30% to 18% by the end of 2019. The rate of reduction will be the same for soybean meal and soybean oil which currently stands at 27%.

Farmers in Argentina will start to harvest their 2016/17 soybean crop in March and it is entirely possible the lower export taxes starting in January of 2018 could convince farmers to hold some of their soybeans until the tax starts declining. The reduction in export taxes already has had an impact on crop acreage in Argentina. Farmers had intended to increase their corn acreage by 25% in 2015/16 and reduce their soybean acreage by 2%, but recent wet weather may have disrupted those plans.

Argentina is the largest exporter of soybean meal and soybean oil and third in soybeans behind Brazil and the United States.