Guido D’Angelo is a senior economist at the Rosario Stock Exchange, graduated in economics from the National University of Rosario, with a master’s degree from the Università degli Studi di Roma.
Patricia Bergero is the deputy director of information and economic studies at the Rosario Stock Exchange, member of the Executive Committee of Argentina’s Carbon Neutral Program, and and agriculture columnist.
AgriBrasilis – What are the impacts of the Mercosur – European Union agreement on agriculture in Argentina?
D’Angelo and Bergero – The conclusion of the Mercosur-EU agreement will likely be favorable for Argentine agriculture. We are facing a partner whose economy is more complex, its production structure more sophisticated, with a higher income market.
Argentina has a relatively low level of exports, with slow growth, and a concentrated export basket in relation to products and destinations. The agreement will likely facilitate not only the expansion of volumes of products already destined for the EU, but also the opening of the market for other products, mainly from regional economies. The development of good policies, the acquisition of technology and the entry of investments will boost growth and modernization processes in Argentine agro-industrial value chains.
AgriBrasilis – Why will there be a gradual reduction in soybean export taxes and what are the consequences?
D’Angelo and Bergero – The gradual reduction of export taxes for the soybean complex will occur over a longer period when compared to other products. This is motivated by the importance of customs resources for this group of products, since they were – and still are – an important portion of Argentine tax revenue. In fact, the soybean complex constitutes 80% of the resources of agro-industrial export taxes.
AgriBrasilis – How will the export tax system work?
D’Angelo and Bergero – Argentina has imposed export taxes on the soybean complex for decades. These rates have been no less than 20% of FOB for any product in the complex for over 23 years.
The recent reduction in export tariffs is a temporary relief for the sector, which will see a reduction in payments from 33% to 26% for soybeans, while industrial products, such as soybean oil and meal, will go from 31% to 24.5%, until June 2025. It is necessary to continue reducing export taxes until they are completely eliminated.
AgriBrasilis – The EU imposes higher tariffs on Argentine soybean oil, with higher rates the more processed the product is. What changes with the Mercosur-EU agreement?
D’Angelo and Bergero – That’s right, Argentine soybean oil is penalized with higher rates the more processed it is. Crude oil for industrial uses currently has the lowest tariff. With the agreement, this rate should go from 3.2% to 0%.
Crude oil for other uses, excluding industrial uses, has a tariff of 6.4%, while refined oil for industrial uses has a tariff of 5.1%, and refined oil for other non-industrial uses has a tariff of 9.6%. The latter will be reduced to 7.68% with the application of the agreement, to 5.76% in the 1st year, with successive reductions until reaching 0% at the beginning of the fourth year.
The last three types of oil mentioned will have a tax reduction process of five annual elimination periods after the beginning of the agreement, until reaching zero. The reductions will be of the same magnitude in all periods.
AgriBrasilis – By how much should retentions be reduced? What are the possible consequences?
D’Angelo and Bergero – In the case of the soybean complex, the most relevant positions will be consolidated into an export tariff of 18% on the first day of the 5th year after the beginning of the agreement. From then on, the rates must be reduced in annual cuts of 1 percentage point from the 1st day of the 7th year of the contract, until the beginning of the 10th year, when the final rate will be 14%. All are maximum rates to be applied, since there is no obstacle for Argentina to establish an export rate lower than what is explained here. This regime includes, among the main products, both soybean flour and pellets, as well as biodiesel, soybean oil and soybean grains, and there is the possibility of increasing the volume of some of these products on the European market.
AgriBrasilis – What are the expectations for the soybean harvest and how to compete with Brazilian soybeans?
D’Angelo and Bergero – The prospects for soybeans in 2024/25 were initially very favorable, with an area of 18 million ha. The rainfall regime has been poor for much of the summer so far, which has affected soil water reserves at the surface and in depth, increasing uncertainty about final production. However, in the first week of February, crucial for defining yields, two short-term precipitation events, but with good spatial coverage, improved prospects.
Increases in area and yields for future campaigns largely depend on the export duties that Argentina applies to the soybean complex – and competing crops – since a 33% rate on exports (current regime) affects the competitiveness of the oilseed.
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