Temporary imports of soybeans will be allowed into Argentina for the purpose of crushing in-country to fill the gap in crushing capacity.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number:
Post: Buenos Aires
Biodiesel Tax Increase and
Temporary Soybean Import Policy
Oilseeds and Products
Government of Argentina recently announced several new resolutions related to biodiesel and
soybeans. The export tax on biodiesel was raised to 32 percent from 20 percent and a required internal
reference price for biodiesel was adjusted to $4,405.30 pesos/ton (approx. USD $958 per ton), a 15
percent drop from the previous mandate. Furthermore, temporary imports of soybeans will be allowed
into Argentina for the purpose of crushing in-country to fill the gap in crushing capacity.
On August 10, 2012, the Government of Argentina (GOA) published official bulletin number 32.457
announcing several new resolutions related to biodiesel and soybeans. The export tax on biodiesel was
raised to 32 percent from 20 percent and a required internal reference price for biodiesel was adjusted to
$4,405.30 pesos/ton (approx. USD $958 per ton), a 15 percent drop from the previous mandate.
Furthermore, temporary imports of soybeans will be allowed into Argentina for the purpose of crushing
in-country to fill the gap in crushing capacity.
Argentina has enough invested in the soybean crushing industry’s infrastructure to process more than 50
million metric tons (MMT) of soybeans annually. Last year, supplies were short because of a hard hit
drought and only 37 MMT of soybeans were crushed, leaving excess capacity around 30 percent. This
caused some crushing plants to close their doors part of the year and many employees to lose their jobs.
In March 2012, members of the crushing industry asked the GOA to consider raising soybean export
taxes in order to promote more incentive to crush in-country, filling the capacity gap (currently the
soybean export tax is 35 percent and the export tax for soybean meal and oil is 32 percent). In the last
few weeks, there have been strong rumors that soybean export taxes would be raised to 40 percent. The
rumors were quieted when the resolution stated that this would not be an appropriate measure to
promote production and competitiveness and instead proposed a solution through two actions: first,
raise biodiesel export taxes to 32 percent, equal to that of other soybean by-products and second, to
temporarily allow imports of soybeans for processing.
The GOA recognizes that the biodiesel industry has contributed quite a bit to Argentina’s
industrialization of the soy industry. In fact, production has more than tripled over the last five years
and more than half of production is exported. Before the tax hike, returns on biodiesel reached more
than 25 percent, which an astonishing difference compared to exporting soybean oil alone whose returns
are very low and in the past have even dipped into the negative. The net difference between soybean oil
export tax and biodiesel export tax (including a small rebate) was 17.8 percent in favor of biodiesel
exports. According to the GOA, raising the tax to 32 percent will allow all sub-products of soybeans to
have the same tax, while still promoting value added products within Argentina. A second resolution
was released that required internal reference price for biodiesel to be adjusted to $4,405.30 pesos/ton
(approx. USD $958 per ton), a 15 percent drop from the previous mandate. According to the
government, the increase in export taxes and drop in reference price will reduce the domestic price of
biodiesel. While it is estimated that nearly 80 percent of total biodiesel production is owned by large
corporations which have integrated the biodiesel plants into pre-existing crushing facilities, the tax hike
is more likely to negatively affect the other 20 percent of smaller companies. About a third of soybean
oil produced in Argentina is destined for biodiesel production. As taxes will be a disincentive for
exports, it is possible there will be a drop in exports of biodiesel. Unless the domestic market can make
up for the drop in exports, more soybean oil may be destined for export rather than further processing in
the biodiesel industry.
The second prong of the solution to boost crushing to meet capacity is to temporarily allow imports of
soybeans. In 2004, Argentina allowed crushers to import soybeans from Paraguay and re-export the
soybean meal and oil by only paying the value added tax, not the full export tax. This worked for
several years until 2009, when the benefit was taken away and Paraguayan soybeans were no longer
allowed to be imported for crushing at the value-added tax rate. Last week’s resolution announced the
temporary revival of this regime, but the crusher must be registered in the “Authorized Soybean
Operators Registry” and must prove that they have purchased 5 MMT of domestic beans for every 1
MMT of imported beans.
During the five years that Paraguayan soybeans were not processed in Argentina, companies in
Paraguay started investment projects in crushing and crush capacity in-country has nearly doubled.
However, production still exceeds domestic use and with next season’s expected crop of more than 8
MMT, some of the exports could be diverted down river to be processed in Argentina again.
Post will continue to monitor the situation and report on market developments as necessary. For more
information on biodiesel and oilseeds, please see the reports in the Global Agricultural Information
Network (GAIN). Links to the resolutions are below.
Joint resolutions 38/2012, 269/2012 and 1001/2012.