Argentine President Mauricio Macri carried through on a campaign pledge by eliminating export taxes on agricultural goods including beef, wheat and corn while cutting a tariff on soybeans by 5 percentage points.
"There are no more excuses to not produce more," Macri told farmers gathered in Pergamino, 245 kilometers (152 miles) west of Buenos Aires. "I will sign the decree today for the end of punitive export taxes and government regulations."
The unwinding of taxes on agricultural exports comes as Macri, who took office last week, is trying to rebuild international reserves that are at a nine-year low. The tax agency, known as AFIP, estimates that as much as $11.4 billion of soy, corn and wheat are being held by farmers waiting to be sold. Export tariffs were increased in the past decade under former presidents Nestor Kirchner and his wife Cristina Fernandez de Kirchner in a bid to boost government revenue.
Argentine farmers have protested the taxes for several years, primarily since 2008 when Fernandez unsuccessfully tried to increase the soybean export tax to 45 percent from 35 percent.
Wheat futures for March delivery fell as much as 0.5% to $4.88 1/4 a bushel in Chicago after the announcement.
Farmers have been hoarding grains in silo bags to protest farm policies as they wait for a more competitive exchange rate. The government has tightly controlled the peso exchange rate, currently at 9.77 per dollar, compared with a black market rate of about 14.86.
Macri has also promised to let the peso float and have a single exchange rate.
Export tariff on soybeans will now be 30 percent. The taxes on beef, wheat and corn were previously 15 percent, 23 percent and 20 percent, respectively.
Argentina, the world’s largest exporter of soybean derivatives, has shipped $17.9 billion of grains and oilseeds abroad this year, the lowest for the period since 2009, according to data compiled by exporters. The 2015-16 soybean crop output may be a record 62 million metric tons, according to Leonardo Sarquis, one of Macri’s agriculture advisers.
Since 2007, many farmers switched to unregulated crops such as barley to avoid the taxes. The 2015-16 wheat crop being harvested may be the smallest in three years, down 16 percent from a year earlier at 9.5 million tons, according to Argentina’s biggest grain exchange.