Javier Milei threatens to reinstate agricultural taxes in June: fear of loss of agricultural profitability

A report by the Institute for Studies on Argentine and Latin American Reality ( IERAL ) of the Mediterranean Foundation warned that agricultural profitability could fall by up to 74% if the national government decides to raise withholding taxes again starting in July. This possibility was suggested by Argentina's own president, Javier Milei , who confirmed that the reduction implemented at the beginning of the year would be only temporary.

The decision to lower the rates in January had been welcomed by the agricultural sector, which interpreted it as the first step toward the long-promised elimination of Export Duties (DEX). However, the lack of concrete definitions and the government's recent gestures fuel fears of a reversal, which would have a significant impact on production, especially in areas far from ports.

The IERAL report indicates that "returning to higher rates would severely reduce producers' profitability," especially in non-Pampas regions such as northern Córdoba, Santiago del Estero, and Tucumán. According to estimates, in some cases profit margins would fall by between 21% and 74%, affecting both producers who rent and those who work their own fields.

One of the most harmful effects of an increase in withholding taxes is that it discourages investment. "DEXs affect the profitability of grain production, inducing agricultural companies to minimize the incorporation of new technologies and limit the expansion of the area under exploitation," warns the document, which was signed by economist Franco Artusso.

In return, the State could collect an additional $930 million if the rates are reversed in the second half of the year. But according to the same report, this additional revenue would have a limited fiscal impact—barely 0.1% of GDP—while the damage to the sector would be much greater in the medium term.

The message from the agricultural sector would be profoundly negative: not only would it mean ignoring a central campaign promise of President Milei, but it would once again punish one of the country's most dynamic industries, just as the sector was beginning to regain ground after the currency uncertainty.

"Agriculture responds to incentives," summarizes the IERAL report. The warning is clear: if we opt for more tax pressure instead of consolidating a predictable framework, we not only stifle investment, but also shrink the future tax base. In other words, raising withholdings today could cost more than we think tomorrow.