Argentina: Farm Dispute Marks An Unhappy First Anniversary

UNCLAS BUENOS AIRES 000314 USDA FOR FAS/OA/OCRA/ONA/OGA/OFSO SIPDIS SENSITIVE E.O. 12958: N/A TAGS: EAGR ECON EINV PGOV ELAB PHUM AR SUBJECT: Argentina: Farm Dispute Marks An Unhappy First Anniversary -- With No End In Sight Ref: (A) Buenos Aires 0246, (B) Buenos Aires 0214, (C) Buenos Aires 0285 -------------- SUMMARY -------------- ¶1. (U) The conflict between the Argentine government and the farm sector is now over a year old, with no sign of a solution. On Tuesday, March 17, the GOA and the farm sector met for a fourth round of discussions on agricultural policy issues. Early rumors indicated that the government, eager to reach an accommodation prior to likely early mid-term elections in June, would lower export taxes on almost all commodities for small producers. However, farm group leaders came out of the meeting empty-handed. Opposition parliamentarians will hold a special meeting in the Lower House on Thursday, March 19 to demand that Congress resolve the export tax issue. However, they appear far short of the quorum needed to convene a special session to consider legislative options that would reduce export duties on soybeans and other major commodities. ¶2. (SBU) The third round of talks between the GOA and farm leaders on March 10 also ended with few advances, and with farm leaders accusing the GOA of not fully implementing previous agreements. Unhappy with GoA intransigence, farm leaders called for a gathering and demonstrations on the sides of major highways on March 12 to mark the passage of one year since the beginning of their dispute with the GOA over export taxes and agricultural policy. The GOA unveiled additional measures to assist regional products, with a fiscal cost of US$390 million, and implementation of agricultural emergency measures in 18 zones, but the announcement fell far short of producers' expectations. The GOA reiterated, however, that it would not meet the producer's principal demand, a reduction in export taxes for grains and oilseeds, nor would it introduce a program to reduce export taxes for medium and small producers. End Summary. ¶3. (SBU) On Tuesday, March 17, the GOA and the farm sector met for a fourth round of discussions on agricultural policy issues. Early rumors indicated that the government would lower export taxes on almost all commodities. However, farm leaders came out of the meeting empty-handed. The government indicated that they would not give any concession on export taxes on major commodities, and reiterated that its claim that it had already provided significant help to the sector in the past six months. The government also encouraged/challenged producers to continue their efforts in taking this matter to Congress. Both sides agreed to meet again in two weeks' time to continue talks. Based on the latest political developments and reactions, Post contacts are not optimistic that advances will occur in the near future. Furthermore, some press reports speculate that this past meeting could have been the last meeting between farm leaders and the GOA for some time. ¶4. (U) In light of the fact that there have been no advances in cutting export taxes on soybeans and other major commodities -- considered essential by producers -- the farm entities have backed a producer protest on the sides of major highways to express discontent. Farm leaders are concerned that the lack of significant results from recent meetings with the government is creating strong pressure among producers throughout the country. They are afraid that the more radical "self-convoked" producers, who do not necessarily adhere to the protest strategy of the rural entities, could launch maverick measures without the consensus of other producers. In fact, many self-convoked producers in the main producing provinces made intermittent roadblocks at 30-some sites after the lackluster outcome of the March 17 meeting. Producers will continue to protest on the sides of roads until Thursday, March 19, when the opposition will hold a special meeting in Congress to address the export tax issue. ¶5. (U) Unhappy with GoA intransigence, farm leaders had previously called for demonstrations on the sides of major highways and held a major gathering on Thursday, March 12, in Cordoba province to mark the passage of one year since the beginning of the rural conflict. At that meeting, which was attended by many opposition leaders, the sector officially presented its document, "The Farm Sector's Contribution to Politics." That document outlines the sector's position on agricultural policy issues related to taxes and exports. ¶6. (SBU) The rural entities and the GOA had met with higher hopes on Tuesday, March 10, to continue working on policies to alleviate the sector's difficult economic situation -- following a seemingly fruitful meeting on March 3 (ref A),which both the government and farm leaders described as positive. However, the four-hour long meeting did not produce the expected results. The GOA expressed surprise and frustration at the farm sector's reactions. The rural entities mentioned after the meeting that discussion on two key points, drought relief and export taxes, had not advanced, and there was no improvement to their situation. Although the government highlighted the speed at which it had worked to publish resolutions on the agreed measures, farmers accused the GOA of changing and omitting key points of the agreement. Producers' lobby groups also showed disappointment and distrust following threats made by the Secretary of Commerce, Guillermo Moreno, to meat packers and buyers at the Liniers cattle market that he would not allow buyers to pay higher prices, despite the fact that the GOA's agreed measures focused on encouraging higher prices for producers. ¶7. (U) Far short of meeting farmers' expectations, the GOA announced additional measures to assist regional products, with a fiscal cost of US$390 million, and implementation of agricultural emergency measures in 18 zones in Argentina, and promised to sign several emergency requests due to the severe drought suffered in most of ¶2008. It also said that it is working with some governors to lower export taxes on honey -- by using half of the current tax income for a "honey strategic program". The GOA also indicated that wool producers in the southern provinces will also have export taxes reduced by half - by using half the current tax revenue from wool exports to partially offset workers' salaries in the next three months. Finally, the GOA indicated that a bill on meat commercialization will soon be passed, although no expected date was announced. -------------- Comment -------------- ¶8. (SBU) The year-old conflict between the farm sector and President Cristina Kirchner remains unresolved. It appears that, due to the unwaveringly firm stances of both sides, resolution of this conflict is most likely to come from Congressional involvement. The opposition is attempting to hold a special meeting in the Lower House on Thursday, March 19, to demand that Congress address the export tax issue. However, the opposition is short of the number required to convene a special session. Press reports indicate that, currently, approximately 100 congressmen support the ag sector; but a minimum of 129 is needed to meet quorum requirements. In addition, the farm lobby sector has indicated that the government's proposal to move up mid-term congressional elections (from October 25 to June 28, per ref C) will likely delay its strategy to push for a Congressional decision on export taxes. Moreover, former president Nestor Kirchner said in a March 17 speech that voters in the upcoming congressional elections can factor into their electoral decisions how to address the concerns of the agricultural sector. Indeed, there has been much media speculation that the sudden onset of congressional campaigns will effectively marginalize the farm protests until the elections conclude. WAYNE