August 15, 2009

 

Argentina farmers eye Senate after House backs pres on taxes

 

 

Argentina's farmers are pinning their hopes for lower taxes on the Senate after the House voted Wednesday (Aug 12) night to extend presidential powers to set export duties.

 

But it looks to be a hard row to hoe, with the government holding a firm majority in the upper chamber and the farmers recognising that they may have to wait until the new Congress is sworn in at the end of the year to push again for reform.

 

"We have to recognise that we're not in the same state of mobilization" as last year," Argentine Agrarian Federation President Eduardo Buzzi told reporters Thursday.

 

In 2008, farmers launched a series of crippling strikes and enjoyed significant popular support in their battle against higher taxes.

 

After months of strife, the Senate eventually rejected a higher grain export tax bill in a tight vote in which Vice President Julio Cobos broke a tie with a vote against President Cristina Fernandez's tax plan.

 

Since then, allies of the president fared poorly in June's midterm elections, with Fernandez losing majorities in both chambers of Congress. However, she still maintains a precarious advantage in the current legislature until the new members take their seats in December.

 

This week, the president was able to rally the Lower House into voting to renew the series of controversial powers delegated to the executive branch, including the ability to set taxes on grain exports that add more than $6 billion annually to federal coffers.

 

The president's Frente Para la Victoria party scored a relatively easy victory, getting 136 votes in favor, versus 100 against renewal.

 

The issue now moves to the Senate, where a vote is expected as early as next week. If approved there, the powers will be renewed for one year. They were set to expire August 24.

 

The so-called delegated powers are a collection of laws accumulated between 1853 and 1994 that transfer congressional power to the executive branch, and which must be renewed periodically.

 

By far the most controversial of these is the authority to tax exports.

 

As the Lower House voted Thursday (Aug 13), farmers stood by watching in the balconies, chanting patriotic slogans. Once the votes were counted and it was clear the legislation had passed, television cameras focused on the angry farmers, some of whom cursed at the ruling party and offered single-fingered gestures.

 

"Those using these superpowers haven't carried us to a better situation, they've taken us to a worse one," the Agrarian Federation's Buzzi said Thursday.

 

Farmers complain that, in addition to a severe drought last season, government policies have brutally distorted the sector, leading to a sharp drop in beef, corn and wheat production, while fomenting an unhealthy reliance on soy.

 

Wheat, corn, dairy and beef exports are tightly regulated to ensure domestic supply, and this season's wheat area is expected to be the smallest in more than 100 years, while the corn area is expected to fall sharply. Ranchers have continued to thin herds, which will lead to tight beef supplies next year.

 

Meanwhile, soy production has increased dramatically due to the profitability of the legumes and the fact that the government doesn't limit soy exports do to tiny domestic consumption.

 

Despite the president's repeated attempts to stimulate other crops, 2009-10 soy planting is expected to surge to up to 20 million hectares this season, shattering the record set during the 2008-09 season, when farmers seeded 16.6 million hectares with the oilseed.

 

If private forecasts hold true, up to 60 percent of all cultivated land will be seeded with soy this season.