Argentina re-establishes grain export duties as farmers cry foul

President Javier Milei’s government has re-established export duties on grain, which had been eliminated at the start of the week, after quickly reaching the dollar ceiling in the scheme but meat and poultry will stay exempt. 

The announcement Thursday closes out a week in which Milei and Argentina, weakened by financial turbulence, received resounding support from Washington.

The United States Treasury announced Wednesday that it was negotiating a swap line with the Central Bank to the tune of some US$20 billion, along with possible credit facilities or the purchase of Argentine debt.

This announcement soothed markets and boosted Argentine assets, halting the depreciation of the peso and calming fears of a default after a run on the currency last week forced the Central Bank to intervene in the foreign exchange market, selling over US$1 billion last week. 

US Treasury Secretary Scott Bessent said in a post on the X social network thatWashington was working with its Argentine counterparts "to end the tax exemptions for the producers of primary materials who cash in foreign currency."

On Monday, Argentina had decided to suspend export duties on grain and meat until October 31 or until a target of US$7 billion was met with the aim of "generating a greater supply of dollars" in the economy.

In a post two days later, the ARCA (Agencia de Recaudación y Control Aduanero) tax bureau pointed out that the target for grain had been reached and that the suspension would be lifted.

"The regime of zero duties on the export of chicken and beef will continue until October 31," confirmed Presidential Spokesperson Manuel Adorni.

The Milei government sought to encourage the farming sector, which represents around 60 percent of Argentina’s total exports, to release its stocks held in reserve and export immediately, instead of waiting. 

After US President Donald Trump expressed support for his “good friend” President Milei on Tuesday and Bessent’s announcement the following day, the dollar strengthened to trade at 1,345 pesos per greenback, compared to 1,515 on September 19 – an appreciation of over 12 percent in less than a week.

US assistance, explained Bessent on Wednesday, is designed "to help” Milei “stay on course until the election" and avoid "an imbalance in the markets causing his economic reforms of substance to regress."

Bessent was alluding to the upcoming October 26 midterms, when Milei is seeking to broaden his support in Congress to boost his reform push. 

His La Libertad Avanza party’s defeat in a key Buenos Aires Province election early this month had ignited concern on the markets, with analysts calling on Argentina to boost its low tally of Central Bank reserves.

Campo criticism

Agricultural producers reacted negatively to the decision to reimpose export duties, criticising the government for only keeping the policy in place for 72 hours. 

The measure was announced Monday night and meant to last until the end of October, but by Wednesday the US$7-billion quota had been met. 

It was later revealed that only a dozen large agro-export companies had benefitted by filing their paperwork. 

According to reporting in local media, some firms registered sales in advance for soybean exports that have yet to even be planted, guaranteeing themselves future duty-free shipments. Stocks have yet to even been purchased from producers.

Complaints from industry leaders began to rain down. Some smaller producers posted videos on social media suggesting that there had been a "set-up."

Nicolás Pino, the head of the Sociedad Rural Argentina (SRA), said: "We want to see if producers were actually able to take advantage of this benefit. How is it possible that the export sector issued so many sworn declarations in such a short period of time to cover such a large sum of money?"

Industry representative Andrea Sarnari of the Agrarian Federation noted that "small and medium-sized producers were not benefited, and they were not even close to getting past the barrier."

ARCA head Juan Pazo rejected those claims. In an appearance on the Carajo streaming channel, he stated: "Transparency in the handling of information is very important, and whenever we take a fundamental measure, no-one ever knows” in advance.

Felipe Núñez, an advisor at the Economy Ministry, joined the defence, insisting that "no-one knew about the measure” in advance.

“It was taken on Sunday, only a few of us knew about it, and, as always in this economic team, we don't create any secrets, and no-one finds out about the measures before they happen. The same thing happened with the [removal of] currency controls. So there's no problem there, no complicity," Núñez added.

– TIMES/AFP/NA