June 6, 2008

 

Argentine grain markets remain stalled due to farm strike

   

  

Argentina's grain markets remained stalled Thursday (June 5, 2006) for the second week in a row due to a nationwide farm strike, which is blocking exports.

 

Monday, farmers extended their blockade on grain sales for a week.

 

They will meet again this coming Monday to decide whether or not to continue the strike in protest over the government's export tax on grains.

 

Farmers have sporadically blocked traffic in an on-again, off-again strike since March, causing food shortages in the cities and cutting off grain exports.

 

In March the government introduced the controversial grain export duty scheme, which fixed price brackets with each higher bracket carrying a higher tax. The plan sharply raised the export tax on soybeans, Argentina's leading crop.

 

The government modified the tax scheme last week, lowering the highest theoretical bracket as a concession to the farmers. However, agricultural sector leaders said it the move was not enough.

 

In addition, Argentina's grain exchanges said this week that the change to the export tax scheme has hindered future sales.

 

The exchanges assert that the current export tax effectively imposes price caps which complicate trade in futures contracts.

 

The new tax scheme "had a devastating effect" on futures markets, the president of the Buenos Aires Cereals Exchange, Ricardo Marra, told local daily El Cronista.

 

Meanwhile, Argentina's President Cristina Fernandez accused rich farmers of denying work and food to the poor through the continuation of the strikes.

 

Clearly referring to moves by truck owners Thursday to blockade roads and cut off food supplies in a bid to force the government or farmers to end the three-month farm conflict, Fernandez said only those in the "rich" agricultural sector could sustain the work stoppages they had imposed on others.

 

"I ask myself, which worker, which businessman, which retailer can for 90 days go without working? Only those who have accumulated great profit and wealth. The rest have to go out and work," Fernandez said.

 

She was speaking at a political rally in the relatively poor district of Matanza in Greater Buenos Aires, a traditional heartland of the president's ruling Peronist Party.

 

The fiery speech seemed designed to point blame for what might be fresh food and goods shortages away from the government and onto the farmers.

 

While the farmers had been blockading only grains exports, the truck owners have effectively imposed a total blockade on other cargo traffic to protest the damage done to them as innocent third parties. For now, however, the farmers seem unwilling to give up on the leverage afforded by the strike and the government has shown no willingness to make concessions.

 

Now, with sympathy apparently shared by both sides for the truck drivers' situation and with potential food shortages likely to stoke public anger, each side appears to be blaming the other for the current situation.

 

Fernandez appears to be depicting the farmers as a greedy privileged sector, vowing that she would fight so that "milk, meat, vegetables and all the fruits of the land are put on people's tables at prices that Argentines can pay."