Increased retentions on soybean meal and oil will also affect producers

The increase in retentions on soybean meal and oil announced this Friday by the Government, from 31% to 33%, will affect producers and not only those who make industrialized products. This was pointed out to this media by representatives of the primary sector and agricultural economists. This position is different from that expressed by some national officials.

The negative effect for producers would be that as industries will have to pay more taxes for the export of by-products, there will be less scope to pay producers for their goods. This was pointed out to the media by the chief economist of the Agricultural Foundation for the Development of Argentina (FADA), David Miazzo, who said that the drop in purchasing power is estimated at USD 15 per ton.

“It would be expected that the price paid to the producer would fall by about $15. If you ask me if this is going to have a negative impact that causes production to fall, it would not necessarily be because it occurs in a context of rising prices, but it causes a potential margin to fall and that discourages it. That's for sure,” he added. The drop in price that producers will face due to changes in soy by-product retentions comes in an increase where drought impacts the current oilseed season, but especially with notable increases in costs, both in fertilizers and phytosanitary products, and also in the area of freight and labor measured in dollars.

Miazzo's expressions are contrary to what national officials say that the increase in withholding will not affect producers. In this regard, the economist said: “Why if they were always against it because it hurt them, now that we have removed it would hurt them? That's part of the story being sold. That is, the things that are done are good and try not to have the measure read as negative, even if it is a lie”.

For his part, Javier Treboux, an economist at the Rosario Stock Exchange (BCR), agreed with Miazzo that a rise in withholding rates causes the industry to lose purchasing capacity, and this has an impact on the producer with the lowest prices at which they will be able to place their harvest. “All farms have different commercial strategies: some have already been setting prices through forward businesses, but we are coming to harvest with a very important universe of merchandise with prices not yet fixed,” he said in statements to the media outlet.

In addition, he noted that total purchases by the export industry still do not reach 10 million tons of the 40 that are expected to be harvested. Of these 10 million, approximately 75% is with a price to be fixed. Therefore, there is a large volume of merchandise that arrives at the harvest is still priceless. In this regard, the representative of the BCR explained that this means that with a lower purchasing capacity, which have an impact on lower prices in the domestic market and taking into account that many merchandise from producers that have no selling price, the results or margins of the harvest are finally open to new prices. “This is the most immediate and visible effect so far,” he added.

The opinion of the leaders

The vice-president of Argentine Rural Confederations (CRA), Gabriel Raedamaeker, also expressed his opinion on the impact that the government will announce in the coming hours, along with a package of policies to reduce inflation that reached 4.7% last February.

“This differential in withholdings is a prerogative that the industry has for producers to pay it that difference that they use to generate industrial production structure. As it disappears, it is clear that the cost structure of the industry has a change. You're going to have a percentage you won't receive in the price. What in other countries should return as a return to export, industry has here as a transfer that makes it the productive link to the industrial one,” said the leader.

At the same time, he recalled that the leadership always stated that the differential “must not exist”, but maintained that its elimination must be accompanied by a decrease in soy withholdings: “If we analyze it in Alice in Wonderland, theoretically that disappearance of the differential should not have an impact on producers, but the industry decreases the price it pays to the producer and that covers it”.

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