Agricultural Policies in Argentina

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The Food and Agriculture Reviews provide a comprehensive assessment of agricultural policies and calculate a set of policy indicators developed by the OECD. These indicators are regularly used in the analysis of the agriculture and food sector in OECD countries and several emerging economies. This review analyses both the indicators available for Argentina and the main agricultural policy areas, such as trade, innovation, sustainability, risk management and value chains. It also provides a series of policy recommendations.

Argentina’s agricultural sector has undergone a considerable innovation process over the last two decades. This transformation was mostly led by a dynamic and pro-active private sector often subject to policies providing negative support via export restrictions and taxes. The rapid adoption of technologies, such as improved varieties and no-till farming, and organisational innovations have contributed to increasing the Total Factor Productivity of crops. Government focus on providing such general services as research, extension, and animal and plant health has facilitated innovation as has the proactive management of risks by farmers. Nevertheless, environmental pressures are increasing with deforestation and the use of pesticides.

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Export taxes generate distortions and negative support to the sector

Export restrictions and taxes on soybean, sunflower, wheat, corn, beef, milk and poultry have depressed producer prices for most of the last two decades in Argentina. Export taxes were typically lower for processed products, while quantitative restrictions and export licences have particularly affected wheat and beef. Export restrictions have proved not to be an effective and sustainable instrument for reducing food inflation, although they did generate fiscal revenue, notably in years of high food prices on world markets. This type of measures may contribute to world market price volatility. Federal revenue from export taxes is not shared with the provincial governments and represented as much as 13% of all tax revenues and 3% of GDP in 2008, a year of particularly high world food prices. Since the end of 2015, policy changes to reduce or eliminate taxes on agricultural products moved in the right direction of reducing distortions. The more recent decision to tax all exports in response to the economic turmoil of August-September 2018 should help macroeconomic stability and set the stage for more sustainable fiscal revenue over the longer term. The new export tax does not discriminate a specific sector like agriculture and has a sunset clause by the end of 2020. It should be part of an on-going process to improve the tax system.

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