Argentina’s Macri Wins; Farm Policy Changes Ahead

Argentina elected Mauricio Macri as its new president November 22. With his leadership will come a major change in farm policy and the release of soybean stocks onto the market.

The center-right mayor of Buenos Aires, who becomes president December 10, won on a platform of free-market reforms and a clean break from the populist, interventionist policies of outgoing president, Cristina Fernandez, and her late husband and predecessor, Nestor Kirchner. Fernandez used quotas and export taxes on wheat, corn and beef to control runaway inflation.

The new administration is expected to almost immediately abolish administrative controls and most of the taxes on exports of agricultural products, including grains, beef and, especially, soybeans.

Under Fernandez, the country has collected a 23% export tax on wheat and a 20% levy on corn shipments. Exports of soybeans, of which Argentina is the world’s third-largest supplier, are taxed at 35%, a levy Macri vows to cut by 5 percentage points per year beginning in 2016. (A report from MarketSense Weekly suggests that a vast supply of soybeans in storage in Argentina could prove troublesome for the market.)

Reuters reports that by the end of Macri's first four-year term, Argentina may have doubled wheat shipments and surpassed Russia and Brazil as a corn exporter, by some estimates.

As a result of these changes, analysts expect farmers to begin alternating more often between soybeans and the other crops, not only boosting corn and wheat output, but nourishing the soil and aiding soybean yields.

Soy currently grows on 62% of Argentina’s cropland; in the U.S., soy grows on 25% of cropland, Reuters reported. S