(Adds reaction from agricultural trade group in paragraph 5)
BUENOS AIRES, Oct 3 (Reuters) - Argentina will not reduce soy export taxes this year or in 2017 as previously announced and will instead reduce the tax by 0.5 percentage points per month from January 2018 to December 2019, President Mauricio Macri said on Monday.
Shortly after taking office in December, Macri eliminated corn and wheat export taxes as part of his plan to revitalize the country's massive farm sector. He cut the export tax on soy, the country's main cash crop, from 35 percent to 30 percent, and the government had planned further cuts beginning this year.
In September, cabinet chief Marcos Pena told Reuters the government was considering postponing the reduction planned for the end of this year, as recession in Latin America's third largest economy ate into fiscal revenue and the government anticipated difficulties meeting planned budget cuts.
Macri's center-right government has pledged to rein in public spending after the previous government's generous social programs contributed to a ballooning deficit. Last month, the government announced a 2017 budget with a fiscal deficit worth 4.2 percent of GDP, higher than the 3.3 percent previously planned.
Coninagro, one of Argentina's largest agricultural trade groups, said that while it generally opposes export taxes, "it is necessary to accept the government's proposal" to postpone the tax cuts in light of the country's difficult economic situation.
The new soy tax plan will include a 5 percentage point rebate to producers in the country's northern provinces - which does not include the country's main soy belt - to account for their higher transportation costs, Macri said earlier on Monday.
The government decided to reduce the tax gradually month-by month rather to prevent "speculation" amid concern farmers would hold off on planting and harvesting until the tax was reduced, Agriculture Minister Ricardo Buryaile said on Monday.
"Surely there would have been a significant holding-back of the crop" if the government announced a larger annual tax cut, Buryaile said.
Argentina is the world's third-largest producer and exporter of soybeans after the United States and Brazil, according to the U.S. Department of Agriculture. It is expected to produce 57 million tonnes of soybeans and export 10.7 million tonnes in the 2016/17 crop year, which began this month.
The country is also the world's top exporter of soybean meal and soybean oil. Macri's government lowered export taxes on those products by 5 points to 27 percent last year. (Reporting by Luc Cohen and Maximiliano Rizzi; Editing by Cynthia Osterman and Diane Craft)