Stocks and flows: Why today soybean export taxes must been eliminated.

The exports tax are a 35% discount on the price of soybeans.

The price of soybeans is determined on the Chicago marketplace, where meet suppliers and purchasers worldwide.

The farmer of Argentina takes the prices of Chicago market as a reference, since no individual can influence that price.

The exports tax are a 35% discount on the price of Chicago. Therefore, the soybean producer of Argentina is at a disadvantage of 35% over other producers in the world.

When the farmer sells his grain, generates a flow of money, the income from sales. It is also a flow of money payments made by the producer. For example: payments of seeds, fertilizers, insecticides, herbicides, fungicides, fuel, transport to the collection, transport to port, taxes, etc .... All these payments made by the producer are a cash flow which is inverse to the flow of revenue.

The difference between the flow of income and expenditure, TODAY, with deductions of 35% and fall in international prices is negative. That means the producer is losing money to produce. How is this possible? This is possible because the producer has a very large stock of capital, primarily due to the high value of each productive hectare.

What happens when the inflows of funds are lower than the outflows of funds in a business cycle? Decrease stocks. Fall the price of an hectare, and the agricultural producer has less capital backing funds in a bank.

But the producer is well aware that in addition to good prices for their crop, he needs to have good yields for a positive return on investment. Poor yields, are a scourge to the farmer, both for the country, since it reduces the amount of grain available for sale.

The yields depend on many factors, soil quality, amount of rain, chance of rain, hail, frost, previous crops, geographic location, etc..

The drought that hit this summer to most of the crops, directly resulted in significant yield losses.

Genuine farmers measure the yields and production costs in quintales, QQ. The average cost of producing soybeans in the year 2008/2009 amounts to 20QQ.

Therefore, the reports says that a positive cash flow should be greater than 20QQ.

But the reality is that in the core area, the best land and climate suitable for agricultural production, the yields of 2009 soybean range from 6QQ to 25QQ.

If the government do not want to eliminate farmers, must eliminate exports tax.