Rise withholding on soy by-products: “The government sees agriculture as a treasury of last resort,” said the president of the oil producers

Strong statements by the president of the Chamber of Oil Industry and the Cereal Export Center (CIARA - CEC), Gustavo Idígoras, following the Government's announcement of increasing withholding of soy by-products. “In general, they see agriculture not as a source of employment, wealth and growth, but they see agriculture as a treasury of last resort,” he said in a dialogue with CNN Radio.

The oil industry benchmark also pointed out that the sector is analyzing the Decree on Increase in Retentions that was published yesterday. In this regard, Idígoras said: “In my opinion the Decree has flaws of illegality, because the Government does not have delegated powers to raise rates since it lost them on 31 December. That's why this rise has no legal basis.”

That is why the head of CIARA-CEC did not rule out that the entity makes a presentation to the Court with the aim of stopping the rise. Possible actions are also being evaluated against Customs, which is where the payment of withholdings comes in, and on the different areas of government that have enacted the increase in taxes.

“The measures announced yesterday by the Government are punishing Argentine employment and industrialization. The economic team is desperately looking for measures and is not finding a recipe to attack inflation and is going the wrong way,” the leader commented. He added: “Raising taxes on the main export products of Argentina and where our country is the world leader in these products, is to punish ourselves from every point of view. And more so in a scenario of global demand and sustained international prices.”

Idígoras also pointed out that during the last few days they have presented various proposals to national officials to promote other types of measures. In this regard, he recalled that between February 15 and March 15, some unforeseen US$1.33 billion had come in, due to the increase in prices that could be used to deal with the current inflation problem and others as well.

On the other hand, it was suggested from the export and oil sector that the Government should open export quotas for maize and wheat. “Although they partially took the idea, we had proposed to release corn that allowed the entry of $700 million fresh in a few days because the exporters anticipated the payment of the withholding,” Idígoras said.

“The increase in external prices affects everyone. In countries that export such as Argentina, such as Brazil, Paraguay, Uruguay, among others, the increase in external prices only implies a 5% increase in inflation per year. In Argentina we have a 5% increase per month. Clearly the rise in agricultural prices is not the central cause of the rise in inflation in our country,” he added.

Criticism

Yesterday, during the press conference, Minister of Agriculture Julián Domínguez specified that the increase in withholding of soy by-products should have no impact on the oil seed prices received by the Argentine producer. “The producer has already been discounted 33% and this is a profit that only oil companies capture”, commented the official regarding the 31% rates for soybean flour and oil, which will now be taxed by 33%.

Regarding the words of the Minister of Agriculture, Gustavo Idígoras said: “The message bothered me a lot, because he himself told me that he was against raising value added withholdings and that this would affect the entire soy chain. Minister Domínguez told us that he was very uncomfortable with raising retentions at the soy industrial complex. We all know that this affects the entire soy chain. 31% of withholding is tax equity, not a benefit. Today, the export of raw beans to the Chinese Government is benefiting, which is the only beneficiary of this situation.”

Finally, regarding what the relationship will be like with the holder of the agricultural portfolio after yesterday's announcements and whether he continues to trust him, the president of CIARA-CEC, said: “I only trust the facts. And the truth is that the facts show me that this Government is against Argentine industrial employment and against exports. So I'm going to act accordingly.”

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