"A majority of ten trucks are directed toward the State"
"Agricultural Producers in Argentina: Struggling Under the Weight of the State"
Swinging the barn door wide, Ignacio Kovarsky, president of the Confederation of Rural Associations of Buenos Aires and La Pampa (CARBAP), addressed the burden of taxation on the countryside in a passionate video. Illustrating his point, he declared, "Seven out of ten trucks leaving here go to the State."
Kovarsky denounced that 70% of the agricultural income is handed over to the State, leaving farmers with the mammoth task of covering the costs of their activities. "With the little that's left, they've got to pay land rent, seed costs, diesel, inputs, school fees for the kids, and their account bills," Kovarsky explained, gesturing at the soybean field behind him.
The footage, recorded in the heart of Buenos Aires, depicts the resolute leader holding a soybean pod and crunching through the furrows. He decided to highlight the financial pressure on livestock producers by sharing the video on social media.
Walking through the field, Kovarsky expounded, "This is the crop, it's in the last stage of its life cycle, the plant is drying. These are the pods—think of them as peanuts, but plump, and they grow right on the ground. A farmer who bought a planter six months ago, buried the seed in the ground here."
He continued, "It needs low environmental humidity to be harvested. They usually make the attempt at noon, depending on the humidity and the wind, they can start the harvest."
Kovarsky's claim came less than a month before export taxes for soybeans are slated to rise again. In January, the Government introduced a temporary reduction in the export rights of several crops and their derivatives—soybeans, corn, wheat, barley, and sorghum. However, the Government announced an extension only for wheat and barley, with the rest of the crops returning to their previous values from July.
This decision sparked uproar in the sector, which has been clamoring for reduced fiscal pressure for quite some time. According to the Foundation for Agricultural Development of Argentina (FADA), the State currently keeps 58% of agricultural income, equating to 58 cents out of every dollar earned by the producer.
Despite a slight decrease in the tax burden from 64.3% in December, it's still considered excessive. As Nicolle Pisani Claro, FADA's chief economist, elucidated, "Although the tax burden has decreased slightly from the last measurement, it's still high: more than half goes to the State. If that burden were lighter, it would help drive more investments, more production, more work, and more consumption overall."
The report unveiled that the state's involvement varies by crop: 62.4% in soybeans, 49.7% in corn, 72.6% in wheat, and 55.1% in sunflower. Non-shareable national taxes, such as withholdings, account for 58% of the total revenue. "If non-shareable taxes like withholdings decrease, it makes the weight of shareable taxes lighter, resulting in a more balanced distribution of resources," added Antonella Semadeni, an economist from FADA.
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- In light of the ongoing financial pressure faced by farmers in Argentina, there is growing concern within the agricultural industry about the excessive amount of revenue being handed over to the State, with 58% of agricultural income currently being kept by the Government.
- This high tax burden is preventing more investments, production, employment, and overall consumption within the sector, as highlighted by Nicolle Pisani Claro, FADA's chief economist, who argues that a lighter tax burden would help drive more growth and development within the agricultural industry, Finance, and Health sectors.
