2024-07-08 10:53:29
Against a complex background in which economic measures and policies are distorting, the latest survey data conducted by consulting firm AZ-Group shows that Argentine soybean producers believe that, The price is only 50% of its Uruguayan counterpart., based on current prices in neighboring Uruguay. Specifically, Argentine producers earn the equivalent of US$208 (European Parliament currency), while their Uruguayan counterparts earn The price is US$400 per ton.
The private consultancy said the main reason for this unfavorable situation is the introduction of the controversial “withholding tax”, which has a distortionary effect on production of 33%. In turn, the impact of exchange rate differences It reduces producers’ income compared to prices in European Parliament dollars. The report is based on the evolution of soybean prices in the Chicago, Uruguay, Rosario and Brazilian markets so far in 2024, based on MEP dollar values.
Production stalled and at a disadvantage
Dialogue with Rodolfo Rossi, Chairman of the Argentine Soybean Chain Association (ACSOJA) Mordo FontevchiaInternet TV, Radio Perfil (AM 1190) and Radio Amadeus (FM 91.1) point out that Argentine soybean producers are affected by the payment of export duties (DEX), as well as the exchange rate gap, which puts them at a disadvantage compared to their peers around the world. A huge disadvantage.
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“Soybean producers, slightly different, received 50% of international price. This reduces the competitiveness of production, with less cultivation and yields, less application of technology (seeds, fertilizers, etc.), less possibility to increase and create value with own capital, less investment in modern machinery. In short, industrial production has stagnated and soybean production has declined in recent years.
It is worth mentioning the importance of the soybean chain’s contribution to the country’s production cycle. “Soybean derivatives are the main sector of Argentina’s export economy, accounting for more than 25% of them and 50% of the agro-industrial sector. The industry’s oil industry installation capacity (although the highest total value is soybean meal) is 70 million tons, idle The production capacity is very high,” said the head of the entity. Oilseed producers come together. “In a normal year like 2022, before the drought in 2023, it would be 45% if imports are not included and 38% if imports are included,” he added.
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The “magic” of producer competition
It is estimated that Argentinian producers receive the equivalent of US$208 (European Parliament USD) per ton, while their Uruguayan counterparts receive US$400 per ton. from Australian Chemical Society They noted: “When we visited other countries, we might not explain how we might continue to produce soybeans. Producers did do magic, taking full advantage of the country’s traditional competitiveness, but in the end They result in our production being reduced and of poorer quality“Rossi told Modo Fontevchia.
“Argentina’s soybean production ranks third in the world. We are following Brazil and the United States. Largest exporter of soybean meal and soybean oil for more than 20 years, With the recent decline in relative absolute volumes, our correlation in the biodiesel market is also high and our spare capacity is high,” he stressed. He added, highlighting the importance of the contribution to the export market: “We compete with them in the external market. It is a purely export product, since more than 85% is exported in the soybean complex. “Domestic consumption is lower than others Two countries, marked by lower internal value creation, mainly in meat production. “
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Withholding tax: an unreasonable tax imposed on the price
In order to alleviate inequality, the head of ACSOJA said: “We fundamentally explain the tax levels and exchange rates in the industry. Other countries will definitely impose other types of taxes related to profits, rather than unreasonable price taxes, such as exports Tax, that is, withholding tax.
“It is difficult to convince the authorities who set these policies that we are the most efficient sector and most responsive to incentives to increase production. Very few countries in the world, especially high-exporting ones, impose such taxes. On the contrary, we The main competitors have specific incentives and incentives, while in Argentina the state support is negative,” Rossi said. ACSOJA noted: “Keeping the commitment to reduce production, albeit gradually, will mark a change in the rules, allowing for significant production and export figures.”
“This administration has eliminated measures implemented by the previous administration that had a negative impact on trade, such as quotas or trust regulations that restricted exports and created restrictions on the development of the industry. For soybeans, it is important to reduce bureaucracy,” ASCOJA The representative stressed that this was a favorable view. However, he noted: “For soybeans, however, export tariffs remain at very high levels and are discriminatory once morest other crops, continuing to have a negative impact on economic growth.”
They proposed a plan to replace agricultural withholding taxes with other taxes, the Fontevecchia model
Producer’s expectations
“Today, soybean producers’ expectations are largely local. We are in a globalized world where the balance between supply and demand (in short, inventories) marks the price that governs economic activity. These are the rules of the game. If we Compared to a year ago, in the current situation, we are on average Argentinian soybean prices fall 23%. Pampas crops average 19%. As a result, the activity is expected to contribute more than $30 billion this year.
“In the long term, we are in an important position in the supply of food, feed, bioenergy and bioproducts, and we have an important position in a world with growing demand. The local government is expected to deliver on its commitments and, while the government is in power, Tax deductions will be zero and the foreign exchange market will be formalized towards a single value. On the other hand, tax reductions are also very important since 59% of agricultural income is used for national, provincial and municipal taxes (FADA, 2024 6). ),” he said, citing the additional tax burden exacerbating local problems. Producer.
production target
“In the 2023/24 season, which is regarding to end, the soybean planting area has grown once more following a lapse of 8 years, growing to more than 1 million hectares. Due to the special health situation, the corn harvest has been significantly reduced, which has resulted in a reduction in the next sowing in 2024/2025. Intention, soybean and wheat-soybean series will occupy the same position,” Soybean President Entity.
“Although it is still early days, it is estimated that soybean planting area exceeds 1 million hectares. This will lead to a possible increase in production of 10-15% from the current 50 million tons., which will have an impact on the reduction of idle production capacity in the oil industry and the increase in exports. The input-output ratio of multiple inputs has improved, which will allow greater use of technology,” he added.
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“Assuming the removal of export tariffs as an important variable, the soybean industry chain is targeting a production of 65 million tons or more (remember, in 2015 we produced 61.4 million tons). After that campaign, the new government moved the remaining crops The withholding tax on soybeans is reduced to zero. This will allow us to supply the crushing industry and export the remaining grains. In short, this gradual reduction will increase all through sustainable management. surface area of crops, because the country leads the world in terms of carbon footprint and emissions reduction,” Rossi explained to the outlet.
“It is worth noting that we need Significant investments in road infrastructure, railway line development, improvement of navigable waterways and standardization of water resources management waterway. Looking at these possibilities, we say that soybeans are more viable than ever, the only thing missing is growth-promoting changes,” Rossi concluded.
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