Nebraska producers are familiar with import tariffs—taxes imposed by an importing country on imported goods. Nebraska agricultural products often face tariffs when selling into foreign countries. Perhaps not as familiar to Nebraska producers is the concept of export taxes—taxes imposed by an exporting country on exports of a good. Countries impose export taxes to raise revenue for the government, regulate changes to foreign exchange reserves, or discourage exports to assure adequate supplies for its consumers.
Argentinian farmers, though, are intimately familiar with export taxes. Argentina, the world’s fifth-largest corn producer and third-largest soybean producer, and a competitor to the U.S. in many markets, levies export taxes on several agricultural goods. The list of goods subject to tax includes soybeans, soybean products, corn, wheat, sorghum, and beef. The tax on corn, wheat, and sorghum is 12 percent. The tax on soybeans and soybean products was 33 percent, however, the Argentinian government announced that effective October 1 the tax would be lowered to 30 percent. The government hopes the reduction will stimulate exports and shore up the country’s dwindling foreign reserves. The reduction is due to expire at the end of the year.
For Nebraska soybean producers, where upwards of 50 percent of soybean produced can be exported in any given year, this is a case where a competing countries policy, the export tax, helps tilt the competitive balance in their favor. The tax makes Argentinian soybeans less competitive in world markets, thereby making U.S. soybeans more competitive. However, the USDA projects the impacts of the export tax reduction on world soybean markets could be marginal. Argentinian farmers are likely to postpone soybean sales despite the tax decrease because the exchange rate for the Argentinian peso relative to the dollar still means lower prices for farmers. In fact, the USDA lowered its October forecast of Argentinian soybean exports for marketing year 2020/21 by 500,000 tons. In turn, the USDA now forecasts U.S. exports of soybeans to increase 500 million bushels. Chinese purchases are the primary reason for the increase in U.S. exports , but a tax on a competitor can’t hurt.