(Adds comments from Coninagro official)
By Hugh Bronstein and Maximilian Heath
BUENOS AIRES, March 5 (Reuters) - Argentina’s main farm groups will hold a four-day sales strike next week, officials with local growers groups said on Thursday, to protest a tax hike that soy crushing companies warn will cripple investment in the key sector.
Adding to the problems attacking the backbone of Latin America’s third-biggest economy, farm analysts said dryness was starting to hurt what had until last week appeared to be promising soybean yields as harvesting was set to get underway.
The government on Thursday increased export levies on soybeans, soymeal and soyoil to 33% from 30%. The move was part of President Alberto Fernandez’s plan to make the country solvent after announcing it will have to revamp about $100 billion in what it calls unsustainable debt.
“Sales will be suspended for four days starting on Monday,” a spokesman for the Rural Confederations of Argentina, or CRA, told Reuters. A source with the group later said the country’s other three main farm organizations would join the sales strike.
Carlos Iannizzotto, president of growers association Coninagro, told local radio on Thursday that the strike would see the “cessation of trade in grains, mainly soy”.
Argentina’s CIARA soy crushing companies chamber meanwhile warned that the tax hike, which went into effect on Thursday, would give an advantage to Argentina’s international competitors at a time when the country desperately needs export dollars.
Growers in the country are expected to produce 54.5 million tonnes of soybeans this season, according to the Buenos Aires Grains Exchange. Harvesting of soy and corn, Argentina’s two biggest cash crops, starts this month.
Lack of rain and the high temperatures over recent days have quickened the loss of ground moisture in key growing areas, the Buenos Aires Grains Exchange said in a weekly crop report.
“Under this scenario, the possibility of any increases in production are ruled out,” the report said.
Independent analysts agreed.
“Rains are needed urgently. We hope to get some relief this weekend, but the yields of late-planted soy have already started to suffer,” said Gustavo Lopez, head of consultancy Agritrend.
CIARA, representing export giants like Bunge and Louis Dreyfus, wants industrialized products to be taxed at a lower rate than beans because they are more expensive to make.
Argentine wheat exports, for example, are taxed at 12% while wheat flour is subject to a 7% levy. Sunflower seed exports get taxed at 7% while sunflower pellets, used as food at fish farms, are taxed at 5%.
But as the cash-strapped government looks to increase revenue ahead of what are expected to be tough bond-restructuring talks, it is the soy sector that offers the juiciest tax take. Argentina is the world’s No. 1 exporter of soymeal livestock feed and soyoil, used in making biofuels.
“CIARA understands that the government is facing the challenge of making its external debt sustainable, but we are convinced that this must be done logically and while defending national industry,” the statement said.
“Competing countries are celebrating this measure because it may remove Argentina from some soymeal and soyoil export markets while increasing the export from Argentina of unprocessed beans,” it said.
Most Argentine soybeans are processed into oil or meal before export. Argentina prizes the huge soy crushing plants that dot the banks of the Parana River because they provide employment and industrial activity that would not exist if the country concentrated on the export of raw beans.
Reporting by Hugh Bronstein and Maximilian Heath; Editing by Diane Craft and Christopher Cushing