"This will delay sales because farmers will be playing the exchange rate," said David Hughes, a grower and president of the Argentrigo wheat industry chamber. The new farm tax system is included in a package of measures Argentina is proposing to the International Monetary Fund in order to lock in early cash disbursements of its $50 billion standby financial agreement. The funds are needed to calm market jitters about the country's ability to pay its debts next year.
Those jitters caused a 16 percent loss in the value of the Argentine peso against the US dollar last week alone, bringing to almost 50 percent its losses so far this year. International wheat and corn shipments will be taxed at four pesos per dollar of exports, which currently comes out to about 10 percent. If the currency keeps falling, the real tax rate would go down.
This season's wheat crop has already been planted. Corn goes into the ground in October. "This will make farmers sit down and recalculate how much corn they're going to plant," Hughes said.
The 25.5 percent export tax that is put on soybeans has been dropped to 18 percent, as has the 23 percent tax placed on international soyoil and soymeal shipments. But on top of that 18 percent tax, the three products will now be slapped with an additional levy of 4 pesos per export dollar. As much as farmers may want to hang onto their wheat crops to take advantage of the swooning peso, they will need to sell at least some of their stocks to buy seeds and inputs for planting of the country's main cash crop, soybeans, in October.
"Soy export taxes will be a little higher. The impact on wheat and corn will be quite important," said Gustavo Lopez, head of the local Agritrend consultancy. "We will probably see an effect on corn plantings."