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October 24, 2016

Soy Export Tax Reduction will have Limited Impact in Argentina

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

There has been a lot of talk recently about the potential impact of the 5% reduction in soybean export taxes for soybeans grown in northern Argentina. After some clarification last week concerning the program, I don't think it will have a major impact on the soybean acreage in Argentina.

Farmers in 10 northern provinces of Argentina will receive a 5% rebate on their 2016/17 soybean production when they sell the crop. The program is available in the 10 northern most provinces including: Misiones, Corrientes, Formosa, Chaco, Salta, Jujuy, Santiago del Estero, Tucuman, Catamarca, and La Rioja. This sounds like a big area, but in reality, the ten combined provinces only produce approximately 5% of Argentina's soybeans. The two largest producers are Chaco at 2% of Argentina's soybean production and Santiago del Estero also at 2%.

For farmers in the region who own their land, this 5% rebate will help him make a profit on their soybeans. For farmers who rent land, they are still probably going to lose money growing soybeans unless there is a significant price increase by the time they sell the crop. Therefore, I do not foresee this plan as spurring a significant increase in soybean acreage. Additionally, even with this 5% rebate, the price of corn in these areas is still better than soybeans.