Top banks bet on Argentine farming boom with Milei cutting taxes

Two major banks in Argentina are seeking to open up more credit for farmers as President Javier Milei tears down economic barriers, including chopping export tariffs for growers.

The local unit of Spanish giant Banco Santander SA and Argentina’s biggest private bank, Grupo Financiero Galicia SA, are expanding a venture – called Nera – that offers loan options to crop growers as well as seed, fertiliser and pesticide providers like Syngenta AG and Corteva Inc.

Nera is projecting US$1.5 billion of credit lines in 2026, which would be a 36% jump from this year’s expected figure. 

Galicia started the company in 2023. By then, Argentine farmers had been stymied by years of government meddling in the sector and were watching rivals in Brazil blow past them. But Milei, a libertarian economist, rose to power shortly after that and for the last two years has been making sweeping economic changes. 

On Friday, Milei enacted an across-the-board reduction in tariffs charged to agricultural exporters, widely considered a key move to unlock investment and production on the Pampas rural belt. 

“Farmers have been in survival mode,” Nera Chief Executive Officer Marcos Herbin said in an interview. “Freeing everything up provides a different canvas; they switch from survival to investing in technology” like gene-edited seeds and agrochemicals.

Galicia sold a 50-percent stake in Nera to Santander earlier this year. Herbin, a Galicia veteran who comes from an agricultural town, said he expects to have brokered US$1.1 billion of finance to thousands of farmers by the end of 2025, double what it did in 2024 – although that year’s numbers were depleted as growers pounced on exchange-rate arbitrage in 2023 to stock up on inputs. 

In a country where recurring crises have kept the economy under-leveraged, the CEO forecasts more growth next year, with soybean and maize planting already progressing well ahead of the 2026 harvest.

Argentina’s agricultural frontier is already stretched, which means most production gains will come from investments to make existing acreage yield more. Herbin reckons that if the government scraps export tariffs – putting the money back in farmers’ pockets to spend on better technology packages – harvests could climb by 40 percent without even expanding planting.

Just take the current wheat crop, which is comfortably headed to a record. While good weather this year has of course nourished plants, the Rosario Board of Trade highlighted on Thursday “the investment that farmers have made in technology, especially in seeds, disease control, and fertilisation” as a driver.

Export tariffs, which are anathema to policy-makers in most parts of the world, have marked Argentine history. Most recently, they were imposed at the turn of this century in the midst of the country’s severe 2001-2002 crisis, and then perpetuated to fund bloated government budgets, raking in billions of dollars in annual revenue. They never went away, and Argentina’s crop industry swam against the tide.

Milei is trying to change that. But even he needs the revenue for now to meet ambitious fiscal goals that have enamoured Wall Street.

Friday’s reductions were only one or two percentage points. The rate for soybean meal and oil – Argentina is the number exporter of both – is now 22.5 percent compared with 31 percentwhen he took office. Milei is also planning a broader tax and labor reform to bring down costs for companies.

“If the government lowers the tax burden, investment in crops can jump from US$16 billion a year to US$22 billion,” Herbin predicted. “More investment means more finance – and that’s a great opportunity.”