On Argentina’s Pampas, Farmers Are All In on Libertarian Milei

[Cordoba]

That tax rate of 33% is only on soy. Wheat, corn, and sorghum remain at a far more modest 12%. Furthermore, that 33% is a max tax rate, applying only to the largest producers, those producing over 1000 tons a year. Here's the graphic --

View attachment 9210


If you go here - and scroll down a couple pages, you can find a chart listing all the new tax rates. Yes, soy is 33% at max production, but nothing else goes over 12%. Most items are taxed at 5-7%. Several categories of foods have actually had the tax lowered, including wool, mutton and fish both fresh & frozen, rice, sunflowerseed, lentils, garbanzos and peanuts. All the items I just listed are now taxed at 5-7%

Does anyone here wish to assert that 5-7% is an unreasonably high tax rate, one which justifies cheating? How about 12%?

This is an example of an annoying situation in which a person cherrypicks one item, and then extrapolates from that to say all of Argentina is broken/dysfunctional/possessed/whatever, when the truth is far more complex, and not nearly so bad.

In addition to the taxes aren't they selling for dollars and receiving pesos at the official? Or is there some kind of dolar soja.

 

[Redpossum]

In addition to the taxes aren't they selling for dollars and receiving pesos at the official? Or is there some kind of dolar soja.

Oh hell yes, there's a dólar soja! There has been for a long time. In fact, at the end of August it just received its 4th update

Dólar soja 4: las claves del anuncio que beneficiará a los productores de soja

Según dio a conocer el Ministerio de Economía, la novedad del Programa de Incremento Agroexportador (PIE, como se lo denomina comúnmente al "dólar soja") es que garantiza un 25% de disponibilidad de divisas para comprar poroto de soja.

www-ambito-com.translate.goog

The usual Google Translate deal, banner is in Castellano and story will initially appear in that tongue, but wait a few seconds and it will change to English.

Reading that article over myself, I am moved to wonder what is going on with soy, in particular. Why is it taxed so much higher than the other grains? Yesterday, I would have assumed that it was a matter of the government wishing to reduce cultivation of soy, and diversify the harvest somewhat, which is sound, thoughtful, non-political policy. Now I'm not sure.

 

[Cordoba]

Oh hell yes, there's a dólar soja! There has been for a long time. In fact, at the end of August it just received its 4th update

Dólar soja 4: las claves del anuncio que beneficiará a los productores de soja

Según dio a conocer el Ministerio de Economía, la novedad del Programa de Incremento Agroexportador (PIE, como se lo denomina comúnmente al "dólar soja") es que garantiza un 25% de disponibilidad de divisas para comprar poroto de soja.

www-ambito-com.translate.goog

The usual Google Translate deal, banner is in Castellano and story will initially appear in that tongue, but wait a few seconds and it will change to English.

Reading that article over myself, I am moved to wonder what is going on with soy, in particular. Why is it taxed so much higher than the other grains? Yesterday, I would have assumed that it was a matter of the government wishing to reduce cultivation of soy, and diversify the harvest somewhat, which is sound, thoughtful, non-political policy. Now I'm not sure.

Oh interesting but 75% at oficial and only 25% at CCL still seems pretty bad. They would be losing half on the exchange rate plus the tax.

I think there must be some benefit they aren't talking about. Like being able to buy equipment or imports at the oficial rate.

Maybe farmland except from bienes personales and property taxes as well.

I don't know why all the fields are still planted with soybeans and they aren't revolting.

 

[Agribotics]

This is an example of an annoying situation in which a person cherrypicks one item, and then extrapolates from that to say all of Argentina is broken/dysfunctional/possessed/whatever, when the truth is far more complex, and not nearly so bad.

Half of all farmland in Argentina is used for producing soy. It's Argentina's biggest export at 36% of the total and constitutes 20% of the world's soy supply. As you noted, an export tax of 33% is levied on 77% of soy, which means 28% of Argentina's exports are being taxed at 33%. Meanwhile the US has zero export tax on its soy exports so giving up 1/3 of your soy production to the government right off the bat is no small beans.

 

[Redpossum]

Readin

Half of all farmland in Argentina is used for producing soy. It's Argentina's biggest export at 36% of the total and constitutes 20% of the world's soy supply. As you noted, an export tax of 33% is levied on 77% of soy, which means 28% of Argentina's exports are being taxed at 33%. Meanwhile the US has zero export tax on its soy exports so giving up 1/3 of your soy production to the government right off the bat is no small beans.

I agree with everything you say here. No argument. I would point out that 28% isn't one third, but that's a minor issue; your main point is valid.

From an agricultural point of view, a monoculture is dangerous. If everyone grows soy, and something bad happens - an infestation of insects, a mold or some other pathogenic organism - and the soy crop fails, that is a disaster. In an economy as dependent on agriculture as this one, it is a national disaster.

This is reason enough to discourage such reliance on one crop. Now, 36% is not "everyone growing soy" but it's still a level high enough to be potentially dangerous, and that alone would justify, in my opinion, the government acting to discourage it.

The next question is, why are they focusing on soy so intensively? is it really more profitable to grow and sell soy at a 33% tax, than to grow wheat and pay only 12%? It's a tough question to answer. If you go to business insider here you will see that soybeans are dirt cheap at 13.69 US cents per bushel. A little more digging will reveal that is takes about 37 bushels of soybeans to make a metric ton. Multiply the two and you get 502 but that's pennies. Divide by 100 and you get a hard-to-believe figure of 5 dollars per metric ton? In contrast the same website lists soybean meal at 470 USD per ton. But it's a US website, so they're probably listing it in US short tons, (not specified), so you need to add 10% for a metric ton.

But wait, it gets more complicated. This page says that soymeal is produced as a byproduct of soy oil extraction. Also, that there are three different grades of soymeal, full fat, defatted with hulls, and defatted without hulls.

Are you still reading?

 

[elhombresinnombre]

I presume, with only what I've been able to pick out of the farming pages of La Nacion, that it's to do with world commodity prices. If Argentine farmers can produce soya and still make a profit at one third less than the world price then the government makes a grab for the rest. No?

 

[Redpossum]

I presume, with only what I've been able to pick out of the farming pages of La Nacion, that it's to do with world commodity prices. If Argentine farmers can produce soya and still make a profit at one third less than the world price then the government makes a grab for the rest. No?

I don't understand the ending of your comment, my friend. You say one-third less, presumably referring to the top tax rate of 33%, but what do you mean by "then the government makes a grab for the rest" ??

 

[elhombresinnombre]

I'm referring to the export tax on soya. Forgive me if I've got my facts and/or numbers wrong (this really is not my specialist subject) but isn't the export tax simply a way of bringing the price up to the world commodity level and ensuring that the government scoops up the difference?

 

[Redpossum]

I'm referring to the export tax on soya. Forgive me if I've got my facts and/or numbers wrong (this really is not my specialist subject) but isn't the export tax simply a way of bringing the price up to the world commodity level and ensuring that the government scoops up the difference?

It's not my specialty either, and as I demonstrated in post #15 above, it's a very complex issue. I gave up on trying to work my way through the numbers; in a long chain of calculations like that, one wrong assumption throws the whole result into the trash.

Next question might be, is there a subreddit for discussion of agriculture in Argentina, and if so, could an outsider venture into that subreddit without being rhetorically hanged, drawn & quartered?

 

[gringoexpress]

I'm referring to the export tax on soya. Forgive me if I've got my facts and/or numbers wrong (this really is not my specialist subject) but isn't the export tax simply a way of bringing the price up to the world commodity level and ensuring that the government scoops up the difference?

The farmers would be selling the soya themselves at the world level if the government weren't forcing them to sell at a bad price and skimming the rest. As soon as it becomes economical to do so, someone always arbitrages commodities, which eventually leads to too many arbitragers and the price converging with the rest of the world.