March 23, 2009

Relations between the agricultural sector and the government took a sharp turn for the worse Friday (Mar 20) as farmers launched a one-week strike to protest export taxes on grains.

 

The new strike comes as protesting farmers manned dozens of roadblocks across key highways in a move reminiscent of the crippling blockades thrown up in 2008.

 

Last year, farmers launched a series of strikes over a four-month period that caused food shortages in the cities and shut down agricultural exports.

 

The drawn-out conflict hit the economy hard in this agricultural powerhouse and drove the president's approval rating down below 30 percent, where they continue to hover today.

 

Argentina's farmers will stop selling all grains, oilseeds and live cattle until next Friday (Mar 27), Rural Confederation president Mario Llambias said at a press conference.

 

Farmers are furious over Congress's failure to vote on a bill to reduce grain export taxes and President Cristina Fernandez's announcement Thursday (Mar 19) that 30 percent of the soy export taxes will now be shared with the provinces.

 

Farmers see it as a cynical move to undercut provincial support for their demand for lower grain export taxes.

 

While leaders of the largest grower groups cautioned against roadblocks, they have limited control over their angry membership.

 

Entre Rios province Agrarian Federation leader Alfredo De Angeli told reporters Thursday that there will be "many blocked roads as the base is uncontrollable."

 

On Tuesday (Mar 17), farm group leaders met with government officials for the fourth time in as many weeks, but they failed to break a deadlock in negotiations.

 

The government has made a number of concessions regarding farm exports and subsidies, but has repeatedly said that the export tax on soy, the country's top crop, is not on the table.

 

Wary residents are watching the new conflict anxiously, with memories of last year's disruptions still fresh.

 

Last year, the farmers scored a victory and lifted their roadblocks after Congress forced the government to roll back a high, sliding-scale grain export tax scheme.

 

But anger has built since then as international grain prices have plunged, a brutal drought parched crops and the government tightened its regulatory grip over the sector.

 

Farm group leaders were set to meet with Production Minister Debora Giorgi and Interior Minister Florencio Randazzo again on Tuesday (Mar 24) for the fifth weekly meeting aimed at defusing the conflict, but the government is unlikely to sit down with the farmers amid a strike.

 

With both sides digging in, it isn't clear how another drawn-out, bruising conflict can be avoided.

 

"We don't know how this conflict is going to end...we don't see a solution in the short-term," the leader of one of the farm groups told Dow Jones Newswires.

 

Another leader said "We'll keep talking with the government, but we don't expect to make any progress on the central issue" of grain export taxes.