As President Cristina Fernández de Kirchner prepares to part ways with the Casa Rosada, she probably won’t miss having to deal with a certain Argentine staple export: everyone’s favorite crop, soy!
With the presidential runoff just two weeks away, Victory Front’s (FpV) Daniel Scioli and Cambiemos’ Mauricio Macri have come out to address their plans for the hurting soy sector.
While both candidates have announced their intentions to completely eliminate export taxes on wheat and corn (currently hovering between 20 and 23 percent), when it comes to soy, they are less ambitious.
Scioli has claimed that upon his first day in office he would reduce the export tax on soy by 10 percent, which would result in a 25 percent tax as opposed to the current rate of (10 + 25 =?) 35 percent. From there the FpV candidate explains there would be a continued but gradual reduction of the export tax.
Macri has plans that differ immensely. JUST KIDDING. His plans for the soy sector are virtually the same through the second year of the presidency, claiming that he would cut the tax to 30 percent after the first year and 5 percent per following year.
The significance may lie in the timeliness of each candidate’s plan, in that Scioli has proposed an immediate cut to a number that will take Macri two years to reach.
Timeliness may carry some significance, as there is apparently US$12.9 billion of soy crops currently being stored by Argentine farmers who are anxiously waiting for the subject of their dartboard fun to pack-up and on get out of office. This is according to Gustavo Marangoni, the head of Banco Provincia and a Scioli advisor, who is aware of the need for an influx of US dollars but wary of the need to monitor the international market before rash cuts are made.
(Marangoni is also the decent guy who defended a Macri economic advisor after a statement of his was taken out of context.)
Ricky Negri, a Macri advisor for agricultural policy, predicts a 30 percent increase in total grain output by 2019 with the Cambiemos candidate in office. Negri claims that the loss of government revenue from the export tax would be made up for by the revenue from increased exports.
The relationship between the current administration and the soy sector goes something like this: Cristina wants to milk the soy (no pun intended) exports’ revenue through taxes (35 percent) and a disagreeable official exchange rate, essentially leaving farmers with less than half of their potential earnings. The soy farmers would rather store their product, which can last up to three years, and wait for prices to rise from increased global and domestic demand while throwing darts at a picture of Cristina in the meantime.