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Cablegate: Argentine Farmers' Strike Continues for Another Week

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0766/01 1552056
ZNR UUUUU ZZH
R 032056Z JUN 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1245
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000766

USDA FOR FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EAGR ECON EINV PGOV ELAB PHUM AR
SUBJECT: ARGENTINE FARMERS' STRIKE CONTINUES FOR ANOTHER WEEK

REF: Buenos Aires 0733 and previous

-------
Summary
-------

1. (SBU) The leadership of Argentina's four main agricultural
organizations decided late on June 2 to prolong their third strike
against the GOA for another full week, at least until Monday, June
9. The farmer groups will continue the boycott on grain sales and
embargo of grain exports, including soybeans. The sale of cattle
for slaughter, however, will be restored to avert disruption to
domestic supply. The decision to continue the strike, along with
ongoing mobilizations across the country, ratifies the sector's
rejection of the government's minor changes to its export tax regime
on grains and oilseeds, the precipitating cause of the current
conflict between farmers and the GOA. Recent regulations placing
more controls on agricultural exports and a bill in Congress to
establish a state trading enterprise for all agricultural products
show that the GOA is deepening its involvement in agricultural
markets. The gulf between both sides of this conflict has widened,
making a resolution even less likely in the weeks to come. End
Summary.

---------------
Still On Strike
---------------

2. (SBU) The leaders of Argentina's four main agricultural
organizations decided late on June 2 to prolong their third strike
since March 12 against the GOA for another full week, at least until
Monday, June 9. The farmer groups decided to continue the boycott
on grain and oilseed sales for export, including soybeans. The sale
of cattle for slaughter, however, will be restored to avert
disruption to domestic supply. They also decided to deepen their
mobilization plan in the interior of the country by pressuring
municipal governments and collecting signatures with the objective
of gaining support from the Congress to revise tax policies
affecting the agricultural sector. The decision to continue the
strike, along with ongoing mobilizations across the country,
ratifies the sector's rejection of the government's minor change to
its export tax regime on grain and oilseeds, which was announced May
29 (see paras 5-6 below).

---------------------------
Both Sides Rallying Support
---------------------------

3. (SBU) In concert with its decision to extend the strike, farm
organizations rallied support across the country yesterday in
response to what they characterized as the GOA's unwillingness to
make concessions. In the small (15,000 person) town of Armstrong,
Santa Fe province, farmers staged a 35,000-person protest led by
farm leader Eduardo Buzzi and charismatic protestor Alfredo De
Angeli. In addition, "tractorazos" (tractor rallies),
demonstrations, and road blocks were carried out in numerous
locations throughout Entre Rios, Cordoba, La Pampa, Chaco, Santa Fe,
and Buenos Aires provinces. Support for the farmers was broad, with
many townsfolk and shop-owners endorsing the strike by shutting down
commercial activities.

4. (SBU) Government officials and supporters defended the measures
and attacked the farmers' stance throughout the day. Vice-President
Julio Cobos held a press conference in which he expressed support
for the President. Also, pro-government picketers staged
counter-protests in front of the headquarters of one of the farm
organizations leading the strike in Buenos Aires city, demanding
that farmers lift the strike. They also held a make-shift strike in
front of the residence of a prominent member of that farm
organization.

------------------------
CONCESSIONS NOT ADEQUATE
------------------------

5. (SBU) The GOA announced on May 29 changes in the export tax
regime (covering soybeans, corn, wheat and sunflower) without
negotiating the changes with farm groups. The changes created
export tax reductions when prices are above US$600 per ton ($16.33
per bushel) for soybeans and above US$300 per ton ($7.62 per bushel)
for corn. At those prices, the export tax will be 52.7 percent for
soybeans (down from 58.5 percent) and 45 percent for corn (down from
53.8 percent). The changes do not affect current export taxes paid,
as they only apply at prices well above current export prices. The
GOA also announced measures to make it easier for small and medium
farmers to collect the subsidies set aside for them. The GOA
emphasized that this was not a change in the export tax, but rather,
a modification to "ensure that futures markets operate."
6. (SBU) Farm groups were not happy with the largely cosmetic
changes and called them "insubstantial" and "unilateral." It
appears that the GOA action was more to convince the general public
that the government is trying to sove the issue, rather than a
serious effort to reach agreement with the farm groups.

---------------------
TIGHTENING THE SCREWS
---------------------

8. (SBU) The GOA has issued many regulations in the past weeks
clamping down on the agricultural sector. On Friday, May 30, the
GOA published another new rule (Resolution 543/2008) which
establishes that wheat exporters must maintain 80% of their stocks
for the domestic market; and they are only allowed to export the
remaining 20%. This is similar to a control mechanism previously
placed on beef exporters. The same resolution also establishes the
new rules and guidelines for exporters to seek and qualify for
export certificates on many agricultural products.

9. (SBU) There have also been reports that the Congress is working
on a bill to create a state trading enterprise that will have the
power to set prices and buy/sell grains and other agricultural
products. This new state trading enterprise would be similar to
Argentina's old grain marketing body (the Junta Nacional de Granos),
but it would include all agricultural products. Currently, the GOA
does not have any of the necessary infrastructure to buy, sell, and
warehouse agricultural products. Office contacts suggest that if
the law passes, it will have a profoundly negative effect on the
solidarity between the four agricultural groups leading the farm
strike, since one of the four (FAA) supports the idea while the rest
are opposed to it. This appears to be a GOA strategy to pressure
the farm sector rather than a project the President would actually
sign into law.

-------
COMMENT
-------

10. (SBU) It appears that both sides have dug in and are prepared
for a long fight. The farmers' groups have maintained solidarity in
the face of government attempts to divide and conquer; and the
government continues to "tighten the screws" to show that they will
not "accept the imposition of any one sector." Recent regulations
placing more controls on agricultural exports, the bill in Congress
to establish a state trading enterprise for all agricultural
products, and repeated hints that the government will go after
farmers who do not accurately report their income for tax purposes,
indicate that the GOA is deepening its involvement in agricultural
markets and continuing its strategy to divide and conquer. These
recent developments, and the absence of any dialogue to break the
impasse, suggest that a resolution is unlikely in the weeks to come.


WAYNE

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