Export tax eating biodiesel profits - Argentine trade exec

27 April 2009 22:33  [Source: ICIS news]

HOUSTON (ICIS news)--Export taxes are eating the profits of Argentina's biodiesel industry, which is operating at only half its capacity and at a loss, a trade official said on Monday.

Carlos St. James, president of the Argentina Renewable Energies Chamber, said lower oil prices and additional production capacity have played a part in the biodiesel industry's current situation.

But St. James said the government's export tax has undoubtedly meant the difference between profit and the current loss for Argentina's biodiesel producers.

"Basically, the government's eating up the lion's share of the profits," St. James said.

Argentina President Cristina Kirchner has quadrupled the export tax on biodiesel from 5% to 20% to finance social programmes, provoking grumbling and even "pray days" from soybean farmers who want to defeat her populist proposals.

By contrast, the US suppports its biodiesel industry with heavy subsidies while the EU helps its industry with import tariffs.

Argentina's producers had hoped to take advantage of the EU's anti-US tariff by increasing biodiesel shipments to Europe to take up some of the slack, St. James said. But first-quarter shipments this year still fell by 6% to 210,144 tonnes, compared with shipments of 223,915 tonnes in the same period of 2008.

St. James said the situation must change since Argentinean biodiesel producers cannot continue shipping product at a loss to Europe or anywhere else.

Last year, 80% of Argentina's biodiesel exports went to Europe. St. James said projections based on the country's first-quarter exports this year indicate Europe would buy only 54% of Argentina's products.

And such projections are based on oil prices continuing to go up instead of down, he added.

"We're in the ironic position of rooting for higher oil prices," St. James said.

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By: Lane Kelley
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