Argentina’s government announced this week a reduction in export taxes on key agricultural commodities, lowering wheat and barley export duties from 7.5% to 5.5% effective June 2026, while also confirming future gradual reductions for corn, soybeans, sorghum, and sunflower products beginning in 2027.

The government presented the measure as a major pro-agriculture signal. But for many Argentine farmers, the announcement felt more like political theater than real reform.

For years, producers have waited for meaningful relief from retenciones. Instead, what arrived was another partial adjustment — despite widespread expectations that export taxes on wheat and corn would eventually fall to 0%.

In practical terms, this policy may slightly improve Argentina’s export competitiveness. But it is unlikely to significantly alter wheat or corn production in the current cycle.

Farmers Waited While Other Sectors Went First

One of the biggest sources of frustration among producers is timing.

The agricultural sector has spent years carrying one of the heaviest tax burdens in the Argentine economy. Export taxes became normalized under successive administrations as an easy source of fiscal revenue, despite repeated promises that they were temporary measures.

Meanwhile, other sectors received relief earlier.

The government moved first on regional economies, industrial exports, parts of the energy sector, mining, and segments of the knowledge economy. In several cases, those industries benefited from tax reductions, preferential exchange mechanisms, or outright incentives long before grains saw any meaningful changes.

For wheat and corn producers, the message felt obvious: agriculture remained the government’s financing mechanism.

That perception intensified after the political change that many rural producers strongly supported. Expectations rose dramatically. Farmers did not expect merely a lower rate — they expected a path toward 0%.

Instead, what arrived was another partial adjustment.

Why Many Farmers See the Measure as Deceptive

The disappointment is not simply about percentages. It is about expectations versus reality.

For months, producers delayed grain sales and waited for a more aggressive reform package. Many interpreted the government’s rhetoric as signaling the eventual elimination of export taxes altogether.

That matters because export taxes directly reduce the price farmers receive. Even modest percentage changes can influence profitability in a country already burdened by high logistics costs, expensive financing, volatile exchange rates, and chronic macroeconomic instability.

But after years of waiting, a partial reduction feels insufficient relative to what was implied politically.

There is also a deeper issue: credibility.

Argentine farmers have seen temporary reductions before. They have seen “transitional” policies become permanent. And they have repeatedly adjusted investment plans based on promises that later changed under fiscal pressure.

As a result, many producers are treating the latest announcement cautiously rather than as a structural turning point.

Why This Likely Won’t Change Wheat and Corn Supply

Despite the headlines, the reduction is unlikely to materially increase Argentina’s wheat or corn supply in the short term.

The simple reason is timing.

Planting decisions for the current cycle were already made months ago. Producers already determined acreage, input purchases, financing strategies, and crop rotations based on the previous tax structure and expected margins.

A tax adjustment arriving after those decisions cannot suddenly create large new planted areas.

At most, the measure may slightly improve producer cash flow or encourage somewhat more aggressive commercialization. But it does not fundamentally alter the agronomic or financial framework of this season.

The economics of grain production are decided well before harvest.

This is especially true in Argentina, where producers face persistent uncertainty regarding exchange rates, inflation, financing availability, and future policy reversals. Farmers generally make conservative planning decisions precisely because policy signals often change unexpectedly.

In other words: the market impact is arriving too late to reshape production.

Where the Measure Could Matter: Competitiveness

That does not mean the policy is irrelevant.

Lower export taxes do improve Argentina’s international competitiveness at the margin. Wheat and corn become more attractive in export channels, helping Argentine grain compete against supplies from Brazil, the United States, and the Black Sea region.

In a global market where margins are thin and buyers constantly compare origins, even small tax adjustments can influence trade flows.

The reduction may also help improve farmer selling pace. Producers who had been holding grain in anticipation of tax changes could now accelerate commercialization, increasing export activity and foreign currency inflows.

From the government’s perspective, that may actually be one of the central goals.

But competitiveness gains are not the same thing as a supply boom.

Without broader structural reforms — including exchange rate normalization, lower logistical costs, more stable rules, and ultimately the elimination of export taxes altogether — Argentina is unlikely to unlock the full productive potential of its grain sector.

The Bigger Picture

The frustration surrounding this announcement reflects something larger than wheat or corn alone.

Argentina’s agricultural sector has spent decades operating under short-term policy management instead of long-term strategic planning. Producers are accustomed to abrupt tax changes, shifting export rules, and political cycles that repeatedly redefine profitability.

That environment discourages investment.

The irony is that Argentina possesses some of the most competitive farmland in the world. Under stable conditions, the country could dramatically expand production, exports, and rural investment.

But stability requires more than symbolic tax cuts.

For many farmers, this latest reduction feels less like a genuine agricultural reform and more like another incremental adjustment designed to maximize fiscal revenue while avoiding deeper structural change.

After waiting this long, many expected much more than that.

Why the Policy Still Makes Sense From a Macro Perspective

Despite the disappointment among farmers, the government’s decision does make sense from a broader macroeconomic perspective.

Argentina is attempting to navigate an extremely delicate balancing act: stabilizing public finances, rebuilding foreign currency reserves, lowering inflation, and gradually normalizing the economy without triggering another currency crisis.

From that standpoint, a gradual reduction in export taxes is politically and economically easier to manage than an immediate elimination.

Export taxes remain one of the government’s few reliable sources of dollar-linked fiscal revenue. Removing them entirely would create a significant short-term hole in public accounts at a time when the administration is trying to preserve fiscal discipline as the anchor of its economic program.

The government is therefore trying to move in stages — offering enough relief to encourage grain commercialization and exports, while still maintaining revenue stability.

There is also a currency angle that matters increasingly in the current global environment.

The U.S. dollar has weakened meaningfully in recent months against several major currencies. In agricultural markets, a softer dollar generally improves the competitiveness of exporters outside the United States because commodities become relatively cheaper in global trade.

For Argentina, that dynamic creates an opportunity.

By slightly lowering export taxes while the dollar weakens internationally, Argentina can improve the competitiveness of its wheat and corn exports without needing a major currency devaluation domestically. That matters because the government is desperately trying to avoid another inflationary shock tied to exchange rate instability.

In other words, the administration may be trying to use external dollar weakness as a window to improve export performance gradually rather than through abrupt macro adjustments.

There is another important consideration as well: farmer selling behavior.

Argentine producers often hold grain as a financial hedge during periods of economic uncertainty, effectively using soybeans, corn, and wheat as a substitute currency. Even a modest reduction in export taxes can incentivize more grain sales, helping generate foreign exchange inflows into the formal economy.

That is critical for Argentina’s central bank position and broader financial stability.

So while many farmers see the measure as insufficient — and from a microeconomic perspective they have valid reasons — the government is likely viewing the policy through a much wider lens: preserving fiscal balance, improving export competitiveness, increasing dollar inflows, and stabilizing the currency simultaneously.

The problem is that macroeconomic logic and producer expectations are not always aligned.

On May 21, 2026, Brazil’s Supreme Federal Court (STF) upheld the legal framework enabling the Ferrogrão railway to move forward, removing a key legal obstacle to one of the country’s most strategic agricultural infrastructure projects.

The project (EF-170) is planned as a 580-mile (933 km) rail line connecting Sinop, Mato Grosso — the core of Brazil’s soybean and corn belt — to Miritituba, Pará, a river transshipment hub feeding the Amazon export corridor. (gov.br)

From there, cargo moves by barge through the Tapajós and Amazon waterways toward northern Atlantic export terminals.

Current export routes from Mato Grosso

Today, grain flows depend heavily on long-haul trucking to multiple coastal ports:

• Santos (SP): ~1,190–1,240 miles (1,900–2,000 km)

• Paranaguá (PR): ~1,240+ miles (2,000+ km)

• Rio Grande (RS): ~1,500+ miles (2,400 km) in peak routing scenarios

• Ilhéus (BA): ~900–1,100 miles (1,450–1,770 km) depending on origin and routing conditions

During peak harvest season, congestion on highways such as BR-163 and port bottlenecks can add 5 to 12 days to total delivery times.

What Ferrogrão changes

The railway effectively replaces a large portion of long-distance trucking with rail:

• ~580-mile rail corridor instead of 1,200–1,500+ miles of trucking to southern ports

• ~5 to 10 days of total logistics time savings during peak congestion periods

These gains come primarily from reducing exposure to highway bottlenecks and shifting freight into higher-capacity rail and river systems.

Competitive implications

Brazil already leads global soybean exports, but logistics costs remain a structural disadvantage versus:

• The United States, with integrated rail and Mississippi River barge systems

• Argentina, with shorter haul distances to Rosario export terminals

Analysts generally estimate that improved northern corridors could reduce export logistics costs by 20%–40% on key Mato Grosso routes, strengthening Brazil’s price competitiveness in Asian markets, especially China.

Even after the STF ruling, Ferrogrão still requires environmental licensing, regulatory approvals, and concession structuring. If these stages proceed without major delays, construction is typically estimated at 5–7 years, placing potential operation in the early 2030s.

Internationally, projects like Ferrogrão are often viewed through a lens that goes beyond logistics and economics. In global media and among environmental organizations, large-scale infrastructure expansion in the Amazon basin is frequently associated with concerns about deforestation, biodiversity loss, and the long-term pressure on indigenous territories. As a result, even projects framed domestically as efficiency upgrades are sometimes interpreted abroad as potential accelerants of environmental risk in one of the world’s most sensitive ecosystems.

At the same time, there is a competing international narrative emerging from trade analysts and infrastructure economists. In this view, shifting freight from long-haul trucking to rail-and-river systems could reduce emissions intensity per ton transported and improve regulatory oversight by concentrating flows into more controlled corridors. This contrast — between environmental risk perception and efficiency-driven decarbonization arguments — has become a defining feature of how Amazon-linked infrastructure projects are debated on the global stage.

Despite Ferrogrão advancing into areas officially classified as the “Legal Amazon,” where large-scale farming is generally restricted under Brazil’s Forest Code, the project received approval to proceed. The Forest Code mandates that private landowners in the Amazon biome maintain a significant portion of their land as native vegetation and restricts expansion of agricultural activities. Ferrogrão, however, is a transportation infrastructure project rather than direct farming, which allowed it to move forward under Brazilian law. Its passage highlights the nuanced way infrastructure projects are treated legally: even in environmentally protected zones, strategic rail and port developments can advance if they are framed as public-interest logistics initiatives rather than agricultural expansion.

Brazilian meatpacking giant JBS made headlines a few days ago. The U.S. Department of Justice (DOJ) opened an antitrust investigation against the biggest industry names in the beef sector in the U.S., including JBS.

Antitrust scrutiny has intensified around America’s largest meatpackers, and critics in the livestock sector are increasingly pointing to JBS as a symbol of the consolidation practices that reshaped the global beef industry over the past two decades.

JBS is part of the so-called Big Four, alongside Tyson Foods, Cargill, and National Beef Packing. Many market reports consistently put the Big Four as representative of 80% to 85% of the total U.S. meatpacking market. They are the heart of the DOJ’s probe.

The Brazilian company’s market share in the U.S. pork industry was estimated by Iowa State University at 18.2% in 2020, jumping from 11.1% in 2007—the latter reported by the Congressional Research Service. However, the USDA data does not provide an absolute number for the market share of JBS in the beef market.

According to JBS Investor Relations data, the company’s North American beef division—covering the United States and Canada—generated approximately $28 billion in revenue. Given that the vast majority of those operations are U.S.-based, this suggests that JBS alone likely accounts for well over $20 billion in U.S. beef sales, representing at least roughly 17% of the USDA-estimated $113.2 billion U.S. beef market.

Shad Sullivan, chair of the Ranchers-Cattlemen Action Legal Fund (R-CALF USA), rose to prominence for his vocal criticism of the four largest meatpacking companies, which he argues have eroded U.S. producers’ profitability. “We have to choose now. It’s either us or it’s a whole new system”, he said in an interview.

The “Big Four” packers allegedly control the beef market through increasing concentration in the cattle sector. JBS’s aggressive expansion strategy in the U.S.—marked by acquisitions and state-backed financing in Brazil—ultimately has landed it in hot water with the DOJ. At the center of the U.S. agency’s concerns is JBS’s rapid consolidation strategy in the country, which contributed to reshaping the competitive landscape of American cattle. The strategy that worked in Brazil and in other parts of the world, and that made JBS one of the most powerful players in the global meat business, may be put on trial by U.S. regulators and prosecutors.

The Ascent of JBS to the Top: From Local Slaughterhouse to Multinational Empire

JBS is today the world’s largest meatpacking company. Beginning in 2005, the company transformed itself from a regional slaughterhouse in the Brazilian interior to a global food holding, with extensive operations in the United States, Australia, Europe, and Latin America. Its first major acquisition in the US was Swift in 2007.

The roots of JBS date back to 1953, when José Batista Sobrinho founded a small slaughterhouse in Anápolis, in Goiás state, Brazil. The company initially operated as a regional beef processor serving local markets, remaining relatively modest in scale throughout the 1990s and 2000s. A leadership change from José Batista to his sons, Joesley and Wesley, led to an aggressive acquisition-driven strategy that would eventually transform JBS into one of the most powerful agribusinesses in the world.

It should be noted that a major factor behind JBS’s expansion was financing from Brazil’s National Development Bank (BNDES.) Through BNDES-Par—the bank’s investment arm—the Brazilian government became one of JBS’s largest shareholders and provided 17.6 billion reais (BRL) in loans and equity financing beginning in the mid-2000s. The Batista brothers used that capital to acquire competitors across several continents, helping create what Brazilian policymakers at the time described as a “national champion”, capable of competing globally.

However, in Brazil, critics argued that JBS benefited from unusually favorable treatment and political connections. Over time, the company became deeply embedded in the political establishment, developing extensive lobbying influence with lawmakers, agricultural blocs, and successive administrations. During Brazil’s Lava Jato scandal (“Operation Car Wash”) and subsequent investigations, the Batista brothers admitted to bribing politicians and public officials in exchange for financing advantages and regulatory support, further intensifying criticism of the company’s relationship with the Brazilian government.

International expansion, on the other hand, first accelerated throughout South America. In 2005, the company acquired Swift Armour Argentina, giving it a significant foothold in the Argentine beef export market. Argentina remains strategically important due to its long-established cattle industry and export channels into Europe and Asia. The acquisition marked JBS’s first major international play and became the launchpad for broader global expansion.

Australia quickly became another critical growth platform for the company. JBS expanded aggressively across the country’s cattle and export sectors, beginning with its A$1.45 billion acquisition of Primo in 2014 and later extending into pork through Rivalea in 2021, eventually becoming one of the country’s largest meat processors and exporters. Operations in Australia supplied key Asian markets, including China, Japan, and South Korea. Nevertheless, the company’s activities in Australia generated controversy as well. Labor conditions, environmental issues, and concerns tied to market concentration and cattle procurement practices periodically attracted scrutiny from unions, regulators, and industry groups.

Expansion into the U.S. beef market, however, was only natural and a matter of time.

JBS Enters the U.S.: The Expansion That Alarmed Regulators and Rivals

The DOJ investigations into JBS do not stem from an isolated event or targeted effort to shield U.S. companies from foreign competition on American soil. Rather, the U.S. government seems to be increasingly concerned with the growing market power of the Brazilian conglomerate, and with the possibility that it may be exporting its business model and practices into the U.S. beef sector—and U.S. business writ large.

JBS has continued expanding in the U.S. through additional acquisitions, including Smithfield Beef Group and Five Rivers. In 2009, the company moved into poultry by purchasing a major stake in Pilgrim’s Pride, one of America’s leading chicken producers, after the company emerged from bankruptcy protection. Those acquisitions helped diversify JBS beyond beef and cemented its position inside the U.S. food supply chain.

Today, much of JBS’s revenue originates from North America, accounting for 50.9% of the total. The company operates beef, pork, and poultry facilities throughout the United States and employs tens of thousands of workers. Its scale has made it one of the most influential players in American agriculture, but also one of the most controversial due to concerns over labor conditions, environmental impact, market concentration, and pricing power.

Thus, the ascent of JBS in the U.S. has drawn scrutiny from regulators, prosecutors, ranchers, environmental groups, and antitrust investigators, as it has before in multiple countries where the company operates.

In May 2026, the DOJ confirmed it was investigating JBS USA alongside Tyson Foods, Cargill, and National Beef over potential anti-competitive behavior in cattle and beef markets. Federal officials said the four companies collectively control more than 85% of U.S. beef processing capacity, and investigators are currently examining allegations tied to price-fixing, market concentration, supply manipulation, and potential suppression of payments to ranchers. Prosecutors reportedly reviewed millions of documents as part of the probe—then acting AG Todd Blanche told NewsNation.

The investigation builds on years of lawsuits and complaints from ranchers, retailers, and consumers who alleged that the dominant meatpackers allegedly coordinated slaughter volumes and manipulated pricing. JBS and the other major packers have denied wrongdoing in the various antitrust cases, though several lawsuits have advanced in federal court and some competitors have already agreed to settlements.

This is no longer a new issue. Separate from the antitrust scrutiny, JBS and its controlling shareholders were previously penalized in a major Foreign Corrupt Practices Act (FCPA) case. In 2020, the DOJ announced that J&F Investimentos (J&F)—the holding controlling JBS—pleaded guilty on criminal charges related to a bribery scheme involving Brazilian officials. The SEC ran a parallel investigation and also found that the company paid millions in bribes, in exchange for financing and political favors tied to its rapid expansion strategy. J&F agreed to pay over $256 million in what was one of the largest FCPA-related settlements involving a Brazilian corporate group.

U.S. Politics and the Future of the DOJ Investigation

Acting U.S. Attorney General, Todd Blanche declined to elaborate on the specifics of the new investigation during its announcement, where he appeared accompanied by U.S. Secretary of Agriculture, Brooke Rollins, and Counselor to the President, Pete Navarro.

The joint appearance of Blanche, Rollins, and Navarro should not be glossed over. They individually represent antitrust, agricultural market access, and trade policy powers, respectively. It is an early signal that this investigation is being coordinated at a level above normal prosecutorial objectives. In their remarks, all three officials focused on broad statements about the U.S beef industry being a matter of “national security”, crediting President Trump’s interest in putting “America First.”

This rhetoric may be an early suggestion on the fate of the investigation, where JBS itself might not be able to escape the present constraints and pitfalls of the bilateral relations between the U.S. and Brazil, or the broader context of the U.S. strategic competition with China. The U.S. has specific interests in the Brazilian mining sector, and wants to limit China’s penetration of Brazil’s trade infrastructure and agribusiness.

Washington knows that JBS needs the North American market, which accounts for 50.9% of its net revenue. More importantly, Washington knows that Brazil has every incentive to protect JBS, as the company’s U.S. market share directly affects Brazilian tax revenue. At 93.3% of debt-to-GDP ratio in 2025, the Lula administration needs to raise tax revenue if it has any chance of running for reelection successfully, as its candidacy rests on social spending, food assistance programs, and infrastructure projects.

It is not unreasonable to think that JBS’s position in the DOJ investigation may become yet another bargaining chip Washington will pressure Brasília with.

JBS’s trajectory as an aggressive global player consolidating the beef industry in the U.S. makes it an easy target in the current political environment. Its expansion in the U.S., through acquisitions backed by Brazilian-state capital, allowed the company to reach the core American food supply chain, which created the perfect conditions to now be exposed to the ongoing antitrust scrutiny.

Regulators in Washington are now revisiting the structure of the U.S. beef industry, as the country’s politics confront the fact that foreign capital is changing the face of American agribusiness.

© 2026 Luis Vieira and Manuel Reyes. All rights reserved. Individual proprietary content and branding remain the property of their respective authors. No part of this work may be reproduced, distributed, or transmitted in any form or by any means without the prior written permission of both authors.

For decades, U.S. agriculture operated under a simple assumption: if you grow it, the market will move it. Crops flowed from farm to elevator, from elevator to port, largely without friction. Yield gains dominated the conversation — genetics, fertilizer, and acreage expansion dictated profitability. Transportation mattered, but it was assumed to scale smoothly alongside production.

That assumption is beginning to break down.

In the United States, rail capacity has not collapsed, but it has changed in character. Over the past decade, several structural forces have reduced system flexibility even as headline efficiency improved. The adoption of Precision Scheduled Railroading (PSR) reshaped rail operations around longer trains, lower idle equipment, and tighter asset utilization. At the same time, rail labor disruptions during and after the pandemic, fluctuating locomotive availability, intermittent service reliability, and episodic congestion during peak harvest seasons have reduced the system’s ability to absorb surges in grain movement.

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Our recent post in partnership with at following the summit between Luiz Inácio Lula da Silva and Donald Trump highlighted an attempt by both governments to reset bilateral relations after months of trade friction. The meeting in Washington focused on tariffs, strategic minerals, security cooperation and trade irritants — including ethanol.

The ethanol issue has become one of the most sensitive agricultural disputes between Brazil and the United States. While the U.S. remains the world’s largest producer of corn-based ethanol, Brazil has rapidly emerged as the second-largest ethanol producer overall, thanks to its longstanding sugarcane industry and, more recently, a fast-growing corn ethanol sector concentrated in the country’s Center-West.

Ethanol Is Back on the Bilateral Agenda

The current negotiations reflect a structural change in Brazil’s biofuel market. For decades, Brazil’s ethanol industry was overwhelmingly based on sugarcane. Today, however, corn ethanol is growing at an extraordinary pace, changing trade flows and creating new competition with U.S. producers.

Brazil’s expansion has been extraordinarily rapid.

According to industry and academic estimates, Brazilian corn ethanol production rose from roughly 140 million liters in the 2015/16 harvest to more than 8 billion liters in 2024/25. Corn ethanol could surpass 10 billion liters by 2025/26.

The increase has transformed Brazil’s ethanol matrix.

Brazilian officials under the leadership of the Workers Party administration are seeking to preserve market access for their ethanol exports while defending domestic producers from U.S. pressure over tariffs and subsidies. U.S. ethanol groups, meanwhile, argue that Brazil’s tariff regime unfairly restricts American corn ethanol exports.

The diplomatic thaw between Lula and Trump has therefore reopened discussions around:

• tariff reciprocity;

• fuel blending mandates;

• market access for U.S. corn ethanol;

• and the future role of biofuels in decarbonization strategies.

The Brazilian Ethanol Policy

Brazil’s ethanol strategy dates back to the 1970s oil shocks. In 1975, the military government launched the Proálcool program (Programa Nacional do Álcool) to reduce dependence on imported oil and support the domestic sugar industry. The policy combined subsidized credit, guaranteed ethanol purchases, mandatory gasoline blending, and incentives for automakers to produce ethanol-powered vehicles.

Because Brazil already had a massive sugarcane sector, ethanol production naturally developed around cane-processing regions in the Southeast and Northeast. The main sugarcane ethanol hubs remain Sao Paulo state, Goias, Minas Gerais, Parana, and Mato Grosso do Sul.

New Ag Frontiers and Corn Ethanol

Corn ethanol only began scaling meaningfully in the mid-2010s.

The catalyst was the explosive expansion of Brazil’s safrinha (“second crop”) corn production. Farmers in the Center-West increasingly planted corn immediately after soybean harvests, dramatically increasing grain supply. The whole expansion started in the 1980s with major government investments in technology for opening new agricultural frontiers in the region through seed technology and recovery of degraded pastures.

This created surplus corn production in inland states far from export ports, especially in Mato Grosso, Goias, and Mato Grosso do Sul. Instead of shipping all the grain long distances to ports, agribusiness groups invested in local ethanol plants.

Today, the largest corn ethanol processing facilities are concentrated in Mato Grosso, Goias, and Mato Grosso do Sul.

Many are “flex plants” capable of processing both sugarcane and corn depending on seasonal economics.

The Core Discussion

For many years, the United States imposed a tariff equivalent to roughly 54 cents per gallon on imported ethanol, partly to offset domestic tax credits benefiting U.S. producers. That tariff expired in 2011.

Brazil historically allowed tariff-free imports of U.S. ethanol, especially for the Northeast market. However, as imports surged, Brazil began introducing quotas and tariffs.

Key changes included:

• 2017: Brazil introduced a tariff-rate quota system;

• 2020 onward: Brazil imposed an 18% tariff on imports exceeding quota levels;

• recent years: U.S. ethanol groups intensified lobbying for retaliation and reciprocal access.

American industry groups argue that Brazil enjoys privileged access to the U.S. market while restricting U.S. exports into Brazil. Brazilian producers counter that the U.S. benefits from massive federal subsidies and renewable fuel mandates.

Sugarcane Ethanol vs. Corn Ethanol in Brazil

One of the central questions in Brazil’s energy transition is whether corn ethanol can compete economically and environmentally with sugarcane ethanol.

Brazilian sugarcane ethanol remains globally competitive because sugarcane has higher energy efficiency, processing costs are lower, greenhouse-gas emissions are significantly lower than gasoline and often lower than corn ethanol, and bagasse (cane residue) generates electricity for mills.

Corn ethanol, nevertheless, still expanded . In the Center-West, transport costs are much higher, corn surpluses are seasonal, ethanol plants create local demand, and distiller grains (DDGs) supports local industries.

Corn ethanol plants therefore became integrated agribusiness hubs rather than simply fuel producers.

In addition, sugarcane production has shown slower productivity growth in recent years, while corn output expanded rapidly through double-cropping systems.

The Lula-Trump summit did not produce a final ethanol agreement, but it signaled that biofuels have returned to the center of the bilateral trade relationship. What began decades ago as Brazil’s effort to reduce oil imports has evolved into a strategic agricultural and geopolitical issue connecting two of the world’s largest farming and energy economies.

Across the Southern Plains, conditions remain highly fragmented. A brief round of early May rainfall provided localized relief, but according to the latest U.S. Drought …

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Dutch authorities blocked at least two cargoes after detecting the HB4 trait, which is approved in several countries including Argentina and China but not yet authorized in the European Union. Argentina’s export sector, represented by CIARA-CEC, has since moved to strengthen segregation protocols for soybeans destined for Europe. Industry discussions have also included redirecting affected supply streams toward China, where HB4 soy already has regulatory approval and where import demand remains structurally strong.

For China, the situation could carry strategic advantages beyond simply absorbing redirected cargoes. Increased South American dependence on Chinese demand may strengthen Beijing’s leverage over agricultural pricing, logistics, and long-term supply agreements at a time when Europe is tightening regulatory scrutiny. A larger flow of HB4-linked soy into China could also deepen the country’s position as the balancing market for genetically modified agricultural products that face resistance in parts of Europe. At the same time, Chinese crushers and feed producers may benefit from discounted cargoes if exporters seek alternative destinations quickly following EU rejections.

The development arrives in a country with a long history of environmental activism surrounding agriculture, food imports, and biotechnology. Greenpeace has for decades campaigned in the Netherlands and across Europe against genetically modified crops, often linking soy imports to broader concerns involving biodiversity loss, deforestation, and industrial farming. Dutch political sensitivity around agricultural sustainability has repeatedly shaped European regulatory approaches, particularly after earlier debates over GMO maize and South American feed imports during the 1990s and 2000s.

Market participants note that the issue may not be limited to regulatory compliance alone. In global agricultural trade, perceptions around sustainability, land use, and political visibility can influence how aggressively certain supply chains are scrutinized. Some analysts privately point to the prominence of large South American agribusiness groups such as Amaggi in past European debates over deforestation and soy expansion as an illustration of how public pressure can shape attention around commodity flows, although no direct connection has been alleged in the current Dutch case.

The immediate commercial effect has been firmer soybean meal prices and increased concern among European feed buyers over supply continuity:

• Traders are now evaluating whether stricter EU inspection regimes could raise costs for Argentine and Brazilian exporters while improving competitiveness for alternative suppliers, including the United States.

• Chinese import channels may gain additional leverage if South American exporters increasingly reroute HB4-linked soy flows toward Asian destinations rather than Europe.

Historically, disputes over unapproved GMO traits have repeatedly triggered trade disruptions well beyond the original contamination events. One of the most consequential examples came in 2006, when traces of Bayer’s unapproved LL601 genetically modified rice were detected in U.S. long-grain rice exports. The discovery led to import restrictions and emergency testing measures across Europe and parts of Asia, with contaminated shipments later identified in multiple countries including the Netherlands, Germany, France, and Switzerland. Researchers later documented measurable impacts on U.S. rice prices and export flows.

A second major case emerged in 2009, when European authorities detected the unauthorized “Triffid” GMO flax variety in Canadian linseed exports. Although the variety had never been commercially marketed, contamination concerns led to extensive testing requirements and trade interruptions affecting Canada’s flax industry for years afterward.

European regulators have also repeatedly intercepted unauthorized Bt63 genetically modified rice originating from China. According to contamination tracking studies, those detections continued for years after the initial findings and became one of the most persistent examples of GMO-related import enforcement in the EU system.

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In fact, it is part of a much longer pattern.

This is not new: a recurring shift away from soybeans

Back on September 15, 2017, in my Successful…

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A century of agricultural dominance

Argentina’s identity as an agricultural powerhouse is not a recent phenomenon—it is foundational. In the late 19th and early 20th centuries, the country was often described as the “breadbasket of the world.” Agricultural exports—wheat, beef, and later oilseeds—financed the country’s rise and, crucially, became the primary source of foreign currency.

Even in recent decades, this dominance remained clear. As of the early 2020s:

• Soybeans and derivatives accounted for roughly 30–35% of total export revenues (and thus foreign currency inflows)

• Corn and wheat together contributed another ~15–20%

In total, agriculture has typically generated around 50% or more of Argentina’s export-derived foreign reserves, making it the single most important source of dollars for the Central Bank.

Losing ground to Brazil

Despite this historic strength, Argentina’s relative dominance has eroded. Brazil has overtaken it in soybeans, corn, and overall export scale, supported by more stable policies and sustained investment. Argentina’s continued reliance on export taxes, combined with weather shocks and financial stress, has constrained growth and reduced competitiveness.

The historical role of energy—and its decline

Energy has also played an important role historically. Argentina was once largely self-sufficient in oil and gas, and at times a modest exporter. However, policy missteps and underinvestment turned the country into a net energy importer by the 2010s, increasing pressure on already scarce foreign reserves.

Energy’s return: from deficit to surplus

That trend has now reversed:

• Energy exports reached about $11.1 billion in 2025, representing roughly 15–18% of total export revenues

• Oil production exceeded 860,000 barrels per day

• The country posted an energy trade surplus of about $7.8 billion

Energy is no longer marginal—it is becoming a core contributor to Argentina’s foreign currency inflows.

Beyond oil: minerals and lithium

Other resource exports are also rising:

• Mineral exports reached about $6 billion in 2025, or roughly 8–10% of export revenues

• Lithium exports grew more than 45% year-over-year (2024 to 2025) and now represent a rapidly increasing share within mining

Together, energy and mining are approaching 25–30% of Argentina’s foreign currency generation, a level that would have been unthinkable just a decade ago.

Agriculture today: resilience and constraints

Agriculture remains dominant, but its relative share is declining:

• Soybean exports increased by 18.5% between 2023 and 2024 (a recovery from the 2022–2023 drought)

• Corn exports rose by 15.2% over the same 2023–2024 period

• Energy exports expanded by roughly 28% from 2024 to 2025, outpacing agriculture structurally

Despite this recovery, agriculture’s share of export revenues has edged down from well above 50% historically toward the mid-40% range as other sectors grow faster.

Export taxes: a structural constraint

A central factor behind this shift is Argentina’s long-standing system of export taxes (“retenciones”):

• Soybeans: typically taxed at around 30–33%

• Corn and wheat: generally in the 10–15% range

These taxes have been a major source of fiscal revenue, but they directly reduce profitability for producers and discourage investment. Over time, they have contributed to Argentina losing market share to lower-tax competitors like Brazil.

The policy wildcard

The future of agriculture—and its contribution to foreign reserves—depends heavily on what happens next with these taxes.

If export taxes are:

• Significantly reduced or fully removed in the short term, and

• Accompanied by credible, multi-year policy stability,

then Argentina could see a strong rebound in agricultural exports. Producers would likely expand acreage, increase input use, and invest in productivity, potentially restoring agriculture’s share of foreign currency inflows closer to historical levels.

Without that policy shift, however, agriculture may continue to grow in absolute terms but lose relative importance.

A changing source of reserves

The key macroeconomic shift is diversification.

Where Argentina once relied on a narrow agricultural base for over half of its foreign currency, it is now moving toward a more balanced structure:

• Agriculture: ~45–50% of export-derived reserves

• Energy: ~15–18% and rising

• Mining (including lithium): ~8–10% and growing rapidly

This diversification reduces vulnerability to any single shock—particularly droughts, which have historically destabilized the economy.

What happens next?

Over the next couple of years, Argentina’s trajectory will depend on how these sectors evolve together:

• More stable reserves: Energy exports provide steady inflows, reducing seasonality.

• Potential agricultural rebound: If export taxes are removed and policy remains stable, agriculture could regain lost ground.

• Dual-engine growth model: Energy and agriculture together could significantly expand total export capacity.

• Greater exposure to global cycles: Oil, lithium, and grain prices will all matter more simultaneously.

• Policy credibility as the key variable: Long-term investment decisions hinge on whether reforms are sustained.

Argentina is not abandoning its agricultural legacy. But for the first time in generations, it is no longer solely defined by it. The country is building a second pillar in energy—and whether agriculture resurges or continues to уступ ground will depend largely on the policy choices made now.

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Rio Grande do Sul plays an outsized role in Brazil’s grain and oilseed system, particularly in soybeans, corn, tobacco, fruits, and rice. In a typical season, the state produces on the order of 18–22 million metric tons of soybeans, 5–7 million tons of corn, 2–4 million tons of wheat, 7–9 million tons of rice, and roughly 700–900 thousand tons of tobacco, underscoring its importance across both export-oriented and domestic food supply chains. The state combines high-output mechanized farming with a subtropical climate that is increasingly characterized by volatility—alternating between drought stress and extreme rainfall events.

According to the Correio do Povo reporting highlighted in recent agribusiness discussions, producers and agronomists are increasingly observing declining soil structure quality in certain areas, especially where intensive double-cropping systems and reduced recovery periods between cycles are most common.

The core issue is not a single factor, but a convergence:

• Intensive cropping systems (soybean–corn rotations with high fertilizer dependence)

• Extreme rainfall events causing erosion and nutrient runoff

• Dry periods that limit organic matter regeneration

• Expansion of cultivated area into marginal or more fragile soils

Over time, these pressures contribute to lower organic matter content, higher erosion susceptibility, and greater dependence on chemical inputs to sustain yields. In practical terms, farmers are increasingly maintaining output levels—but at rising cost and with greater sensitivity to weather shocks.

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