February 25, 2009

The leaders of Argentina's four leading farm groups said Tuesday (February 24) that a start had been made in resolving sticking points with the government, but that many issues still need to be resolved.

 

The farm leaders made the comments upon the conclusion of a meeting with Production Minister Debora Giorgi Tuesday.

 

Concessions made by the government with regards to the wheat, milk and beef sectors showed that the government was willing "to put some solutions on the table", but many issues remain to be resolved, Agrarian Federation President Eduardo Buzzi told reporters.

 

A second meeting with the government is scheduled for next week, Buzzi said.

 

The government offered to eliminate the export taxes on milk and increase subsidies for beef production, Buzzi said.

 

However, the talks did not touch on the export taxes on soy or corn, two major sticking points in relations between the government and farmers.

 

Those issues will have to be addressed next week, as well as issues relating to the beef sector, Rural Society President Hugo Biolcati said.

 

Last Thursday, the farmers announced a four-day strike just hours after receiving an invitation to talks with the Production Minister.

 

The farmers want their tax burden eased and a reduction in government intervention in agricultural markets designed to shield consumers from rising food costs.

 

However, the government is heavily dependent on income from the farm sector, which makes up over 40 percent of exports. The export tax on soy alone made up about 10 percent of the government's tax take last year.

 

With economic growth dropping off sharply due to the international financial crisis and Argentina unable to tap foreign bond markets to finance stimulus measures and a heavy calendar of debt payments, the government isn't going to want to cut off its flow of funds from the farmers.

 

President Cristina Fernandez said in a speech Wednesday that the export taxes were an essential part of the country's economic balance.

 

But Argentines worry that the conflict threatens to lead to a repeat of last year's series of crippling strikes launched by farmers over a four month period to protest the export tax on grains.

 

As food prices spiked during last year's conflict and public patience waned, President Fernandez accused the farm groups of seeking to bring about a coup - a loaded charge in Argentina where bitter memories of the military dictatorship and its brutal repression always remain close to the surface.

 

The farm conflict spurred pot-banging protests against the government across middle class neighbourhood in Buenos Aires reminiscent of the spontaneous gatherings that preceded a series of toppled governments during the economic crisis at the end of 2001.

 

In response, the government dug in, calling in its core Peronist party supporters to huge rallies in the emblematic Plaza de Mayo and accusing the farmers of seeking to threaten the food security of the nation.

 

The crisis was dissipated in July when Vice President Julio Cobos cast the deciding Senate vote against the president's sliding-scale export tax plan, forcing an about-face on the sliding-scale tax scheme and sending farmers back to the fields victorious.

 

Despite the victory, farmer resentment has built up over the past year as international grain prices plunged, a brutal drought cut grain and cattle production and the government tightened its control over exports in an attempt to ensure domestic supply and cheap food prices.