Argentina’s new government has hiked export levies on soy, wheat and corn, according to an official decree on Saturday, hitting farmers in the grains exporting nation to raise the revenue needed to avoid default on a mountain of looming sovereign debt.
Centre-left Peronist Alberto Fernandez, who took office on Tuesday, boosted the rate for soybeans, soyoil and soymeal to 30% from about 25% and lifted the levy on corn and wheat to 12% from around 7%.
The decree also raised beef export taxes to 9% from 7%.
Argentina’s farmers, already hit by high financing costs, inflation and a dry spell, had widely expected their profits to take a hit from some sort of tax hike, with the government facing restructuring talks on about $100 billion in debt.
“Given the serious situation that public finances are going through, urgent adoption is necessary to meet, at least in part, budget expenditures with new resources,” the decree said.
The government office that registers grains exports will be closed on Monday while the new tax structure is put in place.
Argentina is the world’s No. 3 corn and soybean exporter and top supplier of soymeal livestock feed.
Farmers said they were disappointed to hear about the new taxes by way of a decree. They said Fernandez had promised during the campaign to work with them in developing policies.
“This way of letting us know about government policy changes really sends a message,” said Carlos Achetone, president of the Argentine Agrarian Association, one of the country’s main farming bodies. “Our member are calling us obviously upset.”
Carlos Iannizzotto, head of farm group Coninagro, told Reuters the decree “was not a good start” for the Fernandez administration in its relationship with the agriculture sector.
The new agriculture minister, former congressman Luis Basterra, was sworn in on Tuesday in the cabinet of Fernandez, who beat free-markets advocate Mauricio Macri, whose painful austerity measures hurt his re-election bid.
Farmers met Basterra’s appointment with scepticism and worries about increased state intervention and higher taxes, as had happened during the 2007-2015 administration of Cristina Fernandez de Kirchner, who is now Vice President.
Argentina has large maturing debts in 2020 and tough fiscal targets agreed with the International Monetary Fund as part of a $57 billion standby loan deal agreed with Macri in 2018. Fernandez has said that the IMF deal will have to be revamped.