Argentina to put sliding-scale tax on biodiesel exports

The South American country is the world's biggest exporter of biodiesel, made almost entirely from plentiful supplies of soybean oil. Local energy companies are required to sell diesel containing 7 percent biodiesel.

Last month, Argentina raised its levy on biodiesel exports to 32 percent from about 20 percent in a bid to boost domestic supplies and help reduce costly fuel imports.

The global price for biodiesel has since plunged, Fernandez said, forcing the government to come up with a more flexible tool.

The president did not say how the sliding-scale would work or specify whether an upper limit on the tax would be set.

"Both chambers, representing small- and medium-sized producers as well as the big producers, asked for a sliding-scale that will be applied and updated every 15 days because of the constant movement in biodiesel prices," Fernandez said in a televised speech.

Four years ago, the government's attempt to introduce a sliding-scale tax system on exports of soy products, soybeans, corn and wheat triggered months of angry protests by farmers. Fernandez eventually scrapped the measure.

In addition to raising the biodiesel export tax last month, the government cut the fuel's official domestic price to 4,405 pesos (about US$942) per metric ton from the previous month's value of 5,196 pesos per metric ton.

It was not immediately clear how the domestic price would be affected under the new scheme. Small-scale producers had said the combined impact of higher export taxes and lower domestic prices would put many plants out of business.

Argentine biodiesel production in 2011 was 2.4 million metric tons, of which 1.7 million was exported for about $2.1 billion. The country plans to reach 4.5 million metric tons of annual production by 2013.

(Reporting by Hilary Burke and Maximilian Heath; Editing by Gary Hill and Bob Burgdorfer)