BUENOS AIRES: Argentina's government announced yesterday it had suspended exports of soy flour and oil amid rumours it is planning to increase taxes due to soaring primary material costs blamed on Russia's invasion of Ukraine.
One expert told AFP the export freeze was likely a measure to prevent firms registering future exports before the tax rise comes into effect.
The South American country is the world's largest exporter of soy flour and oil. Soy products made up 30% of Argentina's exports in 2021, worth US$9 billion (RM37.7 billion) to the government.
The agricultural markets undersecretary, a division of the agriculture ministry, said in a statement that these exports were suspended “until further notice”.
In 2021, soy flour was Argentina's largest export (14.2%) with soy oil its third biggest (6.9%).
Industry sources claim the government is analysing the possibility of increasing export tariffs on those two products to 33% from 31%. That could be worth US$450 million to the government, which needs all the money it can get to pay off a US$44 billion debt with the International Monetary Fund.
“The closure of exports is done to prevent businesses from registering (sales) before the tax modification,” analyst Dante Romano told AFP. “But it should last just a short time and should not affect the international market.”
Romano said the move is merely aimed at maximising government revenue and should not limit exports.
It comes as the cost of primary materials around the world has increased as a consequence of Russia's invasion of Ukraine and sanctions imposed on Russia by many Western nations.
There are worries this could provoke an increase in food prices in Argentina which would send inflation soaring in a country that already has one of the highest rates in the world (over 50% in 2021.)
Unlike other food items such as wheat, corn and beef, Argentina does not limit the amount of soy products that can be exported.
Argentina's union of agricultural producers expressed its “strong rejection” of any increase in taxes, adding that “there is no room to keep plundering producers”.
“If it is to help the people eat then it makes sense, if it is to reduce the fiscal deficit then it doesn’t,“ said Pedro Peretti, the former president of the Agrarian Federation. – AFP