Study finds Argentinian soy biodiesel an artificial business

According to a recent article by El Enfiteuta, soy biodiesel is alive and well in Argentina thanks to artificial hype derived from treating biodiesel and pure soy oil different fiscally. This conclusion appears in a report by the University of Buenos Aires's CESPA (an academic center focused on studies of the country's economy), which focused on the potentials of biofuels in Argentina.

We have already reported on how several Latin American countries are betting hard on biofuels as means of reducing their oil imports, which would surely help their economies. While we all know the story of ethanol in Brazil, Argentina is focusing on biodiesel because it's one of the world's largest soy producers. Argentina is currently producing about 750,000 m3 of biodiesel per year and is expected to reach 2.25 million m3 in the near future. CESPA's report showed that biodiesel might not be such a good business for Argentina; the profit margin is very low and the internal demand is not strong enough to sustain such high production figures.

Therefore, the article postulates that this industry is created for export. And this is where the taxman plays his role. Export tariffs in Argentina vary widely. In the case of pure soy oil, the tariff is 32 percent, whereas it's only 2.5 percent for biodiesel. The CESPA concludes that soy-based biodiesel would not be such a good business if it weren't for these tax exemptions that artificially alter its final potential.

[Source: CESPA via Agroinformacion]

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