Argentina-Farmers tax breaks closed.

ARGENTINA-FARMERS TAX BREAKS CLOSED.

The government scrapped tax breaks on soybean imports yesterday to promote the use of Argentine beans in crushing plants, but industry analysts say the measure could aggravate tight supplies.

Argentina, the world’s top supplier of soyoil and soymeal, is also the No. 3 exporter of unprocessed soy. But repeated strikes by farmers in the last year have led crushers to import beans to keep plants operating at full capacity.

In a resolution published in the Official Gazette, the government said it was scrapping export tax exemptions on soymeal and soyoil made from imported beans in order to "protect farmers’ incomes." The use of domestic raw materials should be privileged," the resolution said.

The measure is seen as a government effort to pressure farmers to sell millions of tonnes of old harvest beans they have been hoarding. This should ease pressure on the peso by boosting dollar flows.

"What the government’s trying to do is take a chunk of crushers’ supplies to force them to go out more aggressively in the local market to get people to sell soy," said Enrique Erize, an analyst at the Novitas consulting firm.