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Argentina's Agro projects record exports, but high taxes hurt producers

Argentina, one of the world’s largest producers of grains and derivatives, is getting ready to start its agricultural season 2022-2023 with a projection of exports that could reach a record value of US$ 42, 3 billion.

According to With a report from the Rosario Stock Exchange released this Monday (5), the first production projections could allow Argentina to sustain a record inflow of foreign currency for its agricultural exports next year, something the country needs to increase its scarce monetary reserves.

Argentina starts planting corn, sunflower and soybeans in September, three of its main crops. According to the report, the five main agricultural complexes in Argentina can reach exports of US$ 42, 3 billion this season, adding the main grains (wheat, corn, soy , sunflower and barley) and derivatives.

“If this figure materializes, it would exceed by more than 1.3 billion the mark of the current cycle (2021-2022), and would be at a record level in terms of the value of exports from the main complexes in the sector for the third consecutive year”, pointed out the Rosário Stock Exchange.

The fulfillment of these projections will depend, however, on the weather – currently with little rain -, on a pause in production and on prices not falling.

However, the gains for the producer must be compromised by the fiscal appetite of the State under Peronism. A report published in August by agronomists Gustavo Oliverio and Gustavo López of the Producer Conservando Foundation highlighted that grain production in Argentina is affected, like other export activities, by export rates ranging from 12 to almost 33%, depending on the crop and/or derivative, which represents “strong impact on income and on the economic result of general production.”

“Distorted taxes (export duties or improperly called ‘retenciones’, bank credits and debits, on gross revenue, etc.) are a fast and secure source of revenue and they represent a very important percentage of the general revenue, in such a way that it is very difficult to think of a quick elimination of them at a time like the current one, where a large part of the expenses are social expenditures (retirements, pensions, social plans, etc.) and subsidies for transport, energy and others (which also indirectly serve the social)”, highlighted the analysts.

Projections

According to the Rosario Trade Exchange report, while average export prices for most cereals and derivatives will be slightly lower in the next trading cycle compared to the season 2021-2022, the higher projected production would more than offset a drop in prices.

According to the Bolsa de Rosario, the harvest of soybeans, corn, sunflower, wheat and barley from 2022-2023 will reach 128,5 million tons, 3% more than in the previous season, with projected exports of 60,4 million tons, 4% more than than in the previous season.

The sown area would reach 12, 4 million hectares, only 1% less than in the previous cycle. According to the report, production is projected at 60, 9 million tons of corn (+7.5%) and 46, 7 million tons of soybeans (+12, 7%).

Argentina is the world’s largest exporter of soybean meal and oil, the second largest exporter of corn and the third largest exporter of soybeans and sunflower oil.

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