BUENOS AIRES, Argentina—Argentina’s government announced on Monday it had suspended exports of soyabean flour and oil amid rumors it is planning to hike 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 soyabean flour and oil. Soyabean products made up 30 percent of Argentina’s exports in 2021, worth nine billion dollars 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, soyabean flour was Argentina’s largest export (14.2 percent) with soybean oil its third biggest (6.9 percent).
Industry sources claim the government is analyzing the possibility of increasing export tariffs on those two products to 33 percent from 31 percent.
That could be worth $450 million to the government, which needs all the money it can get to pay off a $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 maximizing 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 percent in 2021.)
A rise in the global price of wheat has already provoked an increase in the price of bread in Argentina—where 40 percent of the population lives in poverty.
Argentina is one of the world’s major food producers and an increase in the price of primary materials benefits the country.
However, it also pushes up the price of food inside Argentina.
Unlike other food items such as wheat, corn and beef, Argentina does not limit the amount of soyabean 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.