The Argentine government has announced a ten-percentage point reduction in the so-called "tax for an inclusive and supportive Argentina" (PAIS), which is now set at 7.5%. 

According to experts consulted by AgroPages, this measure is expected to increase demand for imported fertilizers as well as agrochemicals.

The PAIS tax was created during the first months of the previous government and was raised by current President Javier Milei to 17.5%, affecting imports. This tax was valid for five fiscal periods and is scheduled for elimination on December 23, 2024.

According to Armando Allinghi, Executive Director of CIAFA (Argentine Chamber of the Fertilizer and Agrochemical Industry), in the last 40 days, nitrogen prices in the Argentine domestic market have already fallen, projecting the scenario of a lower PAIS tax.

"During this period, international prices remained unchanged or increased, while in the local market, they decreased. This is explained by the expectation of a reduction in the country tax. For phosphate fertilizers with lower supply, the impact will lead to new imports," the director explained.

Jeremías Battistoni, an analyst at AZ-Group Consultancy, estimated that the tax on urea purchases will fall from US$64 to $36 per ton, while for phosphates, the tax would drop from about $100 to about $57 per ton. According to him, the tax cut "reduces the extra costs and barriers faced by the import sector and the economy in recent years."

"In the real market, especially for urea, in the last 30 days, prices in this highly distorted market have changed to parity. For phosphates, the impact is a bit higher as the market has higher premiums. I believe we will see a resumption (in demand)," the specialist pointed out.

The largest fertilizer supplier to Argentina this year has been Morocco, with 485,000 tons, representing a 24.6% increase in volume in 2024. Algeria follows with about 179,000 tons supplied, and Nigeria with about 141,000 tons of urea, according to S&P Global Commodity Insights Global Trade Analytics.

"Urea constituted the majority of fertilizer imported by Argentina this year, with 568,000 tons imported from January to July 2024, followed by monoammonium phosphate (MAP) volumes of approximately 444,000 tons with a 3.17% increase year-on-year. Imported volumes of diammonium phosphate (DAP) were 196,000 tons, a 2.16% reduction year-on-year," S&P Global reported.

Source:AgNews