{"id":1840,"date":"2019-10-30T15:03:30","date_gmt":"2019-10-30T15:03:30","guid":{"rendered":"http:\/\/commodityconversations.com\/wordpress2\/?p=1840"},"modified":"2019-10-30T15:03:30","modified_gmt":"2019-10-30T15:03:30","slug":"agricensus-report-46","status":"publish","type":"post","link":"https:\/\/commodityconversations.com\/wordpress2\/2019\/10\/30\/agricensus-report-46\/","title":{"rendered":"AgriCensus Report"},"content":{"rendered":"

Argentina farmers face agriculture policy overhaul after Peronist victory<\/h3>\n
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Sunday\u2019s election that swept the Peronist parties back into government in Argentina after a four-year hiatus has prompted traders and farmers to brace for a return of export taxes as the country scrambles for foreign currency reserves.<\/p>\n

In a result that was widely expected, Alberto Fernandez of Frente de Todos (Front for All) trounced the incumbent centre-right president, Mauricio Macri, in the polls, winning 48% of the vote versus 40.5% with the remaining 6.2% picked up by independent candidate Roberto Lavagne.<\/p>\n

By attracting more than 45% of the vote, the result means Fernandez will avoid a run-off between the top two candidates and will take office in the Casa Rosada on December 10.<\/p>\n

However, his support was lower than the 15-percentage point lead the opinion polls pointed to.<\/p>\n

And while he attracted support in Buenos Aires province, which is the largest province in terms of agriculture production, Fernandez got fewer votes than Macri in other key agriculture provinces such as Cordoba, Santa Fe and Entre Rios.<\/p>\n

To prop up the battered peso, which has lost 50% of its value this year, the Argentina Central Bank on Monday limited the purchase of dollars by citizens to $200 per month.<\/p>\n

While this does not impact foreign trade, the trading community is already fearing a potential return to the restrictive export and interventionist policies in the agriculture market that were widely adopted by Peronists from 2008 through to 2015.<\/p>\n

While a return to higher export taxes is seen as a given, a bigger fear is the imposition of export quotas or even limits on land ownership to appease a voter base that advocated redistribution of wealth.<\/p>\n

Indeed, earlier this year lawmaker Felipe Sola of Frente de Todos had called for interventionist measures in the domestic wheat market to regulate the domestic price of bread.<\/p>\n

And Juan Grabois, a social leader with very close ties with the Frente de Todos coalition recently suggested that the next government should limit land ownership to 5,000 hectares.<\/p>\n

With inflation running at 55% this year, and given the need to attract foreign reserves, few analysts expect quotas and land restrictions this early in the government.<\/p>\n

Meanwhile, the prospect of a dual exchange rate will almost certainly become increasingly apparent, with one for financial markets and a lower rate for trade to ensure farmers are competitive.<\/p>\n

Tax hike<\/strong><\/p>\n

\u201cThe new government is prone to increasing tax exports. Nobody in the world will give them even a coin as a loan, so they’ll have to look for a way to get money to finance the public expenditure. I think they\u00b4ll rise tax exports on cereals and oilseeds,\u201d said one market source.<\/p>\n

Current taxes on cereals stand at 4 pesos per goods exported \u2013 around 7%.<\/p>\n

But in addition, exports of soybeans, soyoil and soymeal, attract an 18% flat rate taking the total to 25%.<\/p>\n

Some market participants now expect those rates to rise to 20% for cereals and 30% for oilseeds and their derivatives \u2013 close to the 23% and 20% that was in place at the end of the last Peronist government.<\/p>\n

Although others are less pessimistic, expecting a less onerous increase on grains at around 10%.<\/p>\n

If taxes reach the higher end of those estimates, analysts at the Buenos Aires Grain Exchange anticipate that grain production will fall by 5.6% with exports slumping 14.4%.<\/p>\n

That compares with overall grain production in the 2019\/20 estimated at 131.7 million mt, down 3% compared with the previous year\u2019s volume.<\/p>\n

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