May 30, 2014 / 7:27 PM / 3 years ago

Tax cuts seen spurring Argentine biodiesel exports this year

BUENOS AIRES, May 30 (Reuters) - Argentine biodiesel exports are set to rise 30 percent this year thanks to recent tax cuts that should help Latin America's No.3 economy regain its position as the world's top supplier of the fuel, local producers said on Friday.

Claudio Molina, head of the Argentine Biofuels Association, which represents companies that make soybean biodiesel, said shipments were expected to rise to 1.5 million tonnes this year, close to the country's record of 1.7 million.

Earlier this week, the government slashed export taxes on the alternative fuel to 11 percent from 21 percent.

"Without the cut in export taxes, exports would have been half of what we now expect them to be," said Molina, executive director of the biofuels chamber.

"All this year's measures combined have to have a big impact in terms of increased production," he said, adding that output should be at least 2.4 million tonnes this year.

On Wednesday, Argentina's Congress suspended taxes on local biodiesel use, providing another boost to the industry.

Among Argentina's top biodiesel producers and exporters are international grains giants Cargill, Bunge and Louis Dreyfus.

Indonesia overtook Argentina last year as the world's No. 1 biodiesel supplier. Argentine shipments dropped off after the European Union raised tariffs, accusing the South American grains powerhouse of unfair trade practices.

The EU measures hurt Argentina's alternative fuels industry. Biodiesel producers had been working at 40 percent capacity earlier this year, despite a record soybean crop this season expected by Argentina.

Argentina is the world top exporter of soybean oil, used to make biofuels, and its No. 3 supplier of raw soybeans.

The government reported on Friday that 78 percent of the 2013/14 harvest had been collected so far.

Writing by Hugh Bronstein; Editing by Diane Craft

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