The political costs will be too great for Argentina President Mauricio Macri to slow or delay cutting soybean and soybean product export taxes by 0.5% each month as promised more than two years ago, according to analysis by USDA released June 4. Argentina is the biggest global exporter of soybean meal and soybean oil and drought has reduced this year's crop by more than 32% from a year ago.
The farm sector provided significant support for Macri’s campaign in 2015 by delivering the key rural vote, which a policy reversal would threaten as Macri looks toward a 2019 election. The government is on the brink of running out of cash and is currently negotiating a loan with the International Monetary Fund, while inflation stands at 40%. Public and political opposition has been intensifying against Macri's economic policies that included cuts for electricity and transportation subsidies.
``It is likely the government realized that the political costs of such a shift were too high in light of the drought-devastated soybean crop this year and financial losses to the agricultural sector,'' USDA economists in Argentina said in the report.
Argentina's agriculture ministry announced in January it had cut the soybean export tax from 30% to 29.5%. This is part of a plan announced in December 2015 to cut rates 0.5% each month until the tax is down to 18%. Macri promised during his campaign that he would get rid of all agricultural export taxes. As he took office, he did eliminate the corn and wheat export taxes, while presenting a plan to phase out the soybean export tax.