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Last Update: December 26, 2007
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Argentina Increases Taxes on Soy Exports
Environmentalists Welcome Measure while Soy Farmers Take to Streets
March 29, 2008 - Buenos Aires. The Argentine government, headed by newly elected president Cristina Fernandez de Kirchner, announced a historic tax hike last week bringing retentions on soy exports to 44% from the previous 35% withholding. The hike spurred a nation-wide protest from the agro sector which has been reaping the benefits of global surge in soy prices since the mid 1990s.
The Argentine Finance Minister, Martin Lousteau, to the surprise of environmental groups, justified the tax increase as an incentive to stop what he called the “soyification” of the national economy and an incentive to farmers to go back to producing much needed goods consumed by Argentine's such as meats, vegetables, milk and other products that have given way to booming soy (Argentine soy is almost entirely for export). In parallel, the measure includes tax reductions for farmers producing wheat and corn, traditional staple crops which have also seen considerable drops in production in favor of soy.
President Cristina Kirchner spoke in a national broadcast last week, indicating that the measure also aims to redistribute the significant economic windfall of surging soy revenues to promote public works and social investments for greater society.
Rising international soy prices have driven the agrosector to soy production, and as a result, they are cutting away at native forests in a soy frenzy that has lasted a decade and thus far affected some 2 million hectares. To protest the tax rise, soy farmers have taken to the roads, impeding the transport of produce to markets, resulting in price hikes and scarcity of basic agricultural goods at supermarkets nationwide, such as meat, poultry, vegetables, fruits and dairy products. The farmer protests culminated last week in a nationwide broadcast by Ms. Kirchner, calling for a rational and equitable approach towards more sustainable and less concentrated development.
Argentina is one of the world's largest GMO soy producers, and has benefited enormously over the last decade, as soy prices have more than doubled. Environmental groups, including Greenpeace, extremely concerned with vast land usage shifts towards GMO soy intense agriculture, welcomed the measures, seeing the new tax as a clear incentive to slow and perhaps even reverse the soyification of Argentine agriculture.
The Argentine National Environmental Authority (the SAYDS), welcomed the measure, indicating that the soy monocrop is annihilating the native forest reserve, deteriorating the quality of arable land, and as a consequence, biodiversity is in great peril.
The government stands firmly behind the tax hike, while farmers remain set in their resolve to revert the new national tax on soy exports. An important negotiating space was wedged following the president's national address, which many hope will break the deadlock and bring produce back to the market shelves this week.
