BUENOS AIRES: Argentina slashed an export duty for biodiesel by more than 60pc in an effort to prop up an industry that has been hard-hit by the oil price collapse and a virtual blockade of the European market.
President Cristina Fernandez de Kirchner’s administration retroactively reduced the effective export duty on biodiesel to 3.31pc in October, from 8.6pc in September.
The new level is the lowest since the government implemented a sliding-scale system in 2012.
The struggling soybean-based industry registered a 56pc decline in exports to 48,150t in the first nine months of the year, compared to January-September 2014.
But sector executives have said the industry will not get back on its feet without a sharp rebound in crude prices.
The retroactive manner in which the duty was adjusted highlights longstanding complaints from the biofuels sector that they cannot plan ahead, forcing them to deliver biodiesel without knowing how much they will be paid.
The government is supposed to update the export duty monthly, but it rarely does and ends up imposing retroactive changes that can hurt or help producers that have already shipped their product.
This year, effective export duties began at 7.25pc in January, rose to 13.2pc in April, dropped again to 5pc in June and then rose again to 9.82pc in August.
“The problem isn’t the duties but rather that they change all the time,” Victor Castro, head of the Argentinian biodiesel chamber Carbio, told Argus earlier this month. “It turns into a lottery.”
This oscillation in duties comes as the country’s large, export-oriented biodiesel plants are struggling to find alternative markets after the EU imposed anti-dumping tariffs on biodiesel imports from Argentina in 2013.
Although the sector was once able to rely on temporary increases in conventional diesel prices to sell biodiesel to traders, those opportunities dried up with the oil price slump. Peru and the US are now the only two significant markets for Argentina’s biodiesel, amounting to around 30pc and 70pc, respectively, of total sales in recent months.
The World Trade Organization (WTO) is expected to issue a decision on Argentina’s complaint against the EU by the end of November or early December.
The government also decreased local biodiesel prices by around 1pc for October sales. Argentina has a tiered wholesale pricing scheme for biodiesel based on the size of production.
Small and medium-sized producers supply around 80pc of the domestic market, while the larger producers focus on the export market.
Afghan relations Pakistan still wants to rub shoulders despite allegations
KABUL: Despite all the rampant allegations propagated by Afghanistan regarding the use of Pakistani soil to foment terror in the...
