August 26, 2008


Argentina ups subsidy programme by US$330 million



In the face of mounting protests from farm group leaders, the Argentine government on Monday (August 25) announced an additional ARS1 billion ($330 million) in agricultural subsidies designed to quell the unrest.


"We've got resources..., and a law to increase the budget is being sent to the Congress," Agriculture Secretary Carlos Cheppi said.


The government has been increasingly relying on subsidies to domestic food suppliers to compensate for export limits and price caps, but farmers complain that the funds don't make it to their pockets.


"We don't want subsidies..., we want tax breaks designed to stimulate production," Argentine Agrarian Federation leader Alfredo De Angeli said in a recent interview.


The government has paid out almost ARS2.6 billion in subsidies to the sector since March 31 of last year, according to ONCCA.


Faced with rising food prices and sharp protests from farmers, the amount of subsidies paid has risen sharply in recent months, with ARS1 billion paid between April 1 and August 21 - about 40 percent of all payments made.


The bulk of the subsidies went to domestic wheat millers, poultry farmers, cattle feed lot operators and dairy producers.


However, farmers continue to complain over the high tax burden on the sector, export limits and the attempts to cap local prices. The measures are stunting production and will lead to shortages in the coming years, according to De Angeli.


Farmers launched a series of crippling strikes and roadblocks following a March increase of the export tax on soy - the country's principal crop. After a Senate vote against the sliding-scale taxes in July, the government reversed the plan and went back to the fixed 35 percent export tax implemented in November of last year.


While farmers lifted their strike after the tax reversal, they still complain bitterly about government agricultural policy and launched a series of protests in recent weeks. There are implied threats that the strike may resume if the government continues to turn a deaf ear to their complaints.


"We're still without solutions... costs have gone up a tonne and now even the 35 percent tax (on soy exports) is super expensive," De Angeli said.


Complaints are also coming from the other large farm groups.


"Nobody is asking for money, we're asking for a change of policy and the chance to operate in the markets which are totally frozen," Rural Society vice president Hugo Biolcati said.


The four top farm groups have a large protest rally planned on August 30 in the grain processing and export hub of Rosario.

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