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Cablegate: Argentine Farm Leader Luciano Miguens Comments On Farm

VZCZCXYZ0036
RR RUEHWEB

DE RUEHBU #1171/01 2322032
ZNR UUUUU ZZH
R 192032Z AUG 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1843
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 001171

USDA FOR FAS/OA/OCRA/ONA/OGA/OFSO

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EAGR ECON AR

SUBJECT: ARGENTINE FARM LEADER LUCIANO MIGUENS COMMENTS ON FARM
DISPUTE

1. (SBU) SUMMARY: The Ambassador met with Luciano Miguens,
President of the Rural Society of Argentina (SRA), during the
Palermo Livestock Show in Buenos Aires city. Miguens gave his views
on the recent farm strike and its political and economic impact.
While pleased that the government had repealed the controversial
variable export tax, Miguens noted that the government implemented
numerous new regulations during the farm dispute which have
increased controls and limitations on the sector. He stated that
the farm groups have a good relation with newly appointed Secretary
of Agriculture Carlos Cheppi, but the latest government actions
indicate that the farm problem is not resolved. END SUMMARY

2. (SBU) The Ambassador met with Luciano Miguens on July 31 at the
annual Palermo Livestock Show in Buenos Aires to discuss
developments in the agricultural sector. As president of the SRA,
the oldest farm organization in Argentina, Miguens was part of the
four member commission (Mesa de Enlace) that represented the rural
sector during the farm strike and in subsequent discussions with the
government. Widely considered one of the more moderate agricultural
representatives, Miguens was concerned about the future direction of
government policies towards the sector. The government boycott of
participation in the traditional Palermo Livestock Show served to
highlight the ongoing differences between the GOA and the farm
sector. While the GOA agreed to withdraw the variable export tax
after it was defeated in Congress, Miguens noted that other measures
introduced during the course of the farm strike to limit exports and
control the agricultural market remain in place.

----------------------------
Beginning of the Farm Strike
----------------------------

3. (SBU) Miguens described as unbelievable and unnecessary the farm
crisis created by the government in March 2008 when it issued
Resolution 125. The resolution created a sliding scale for export
taxes on grains and oilseeds, which in the case of soybeans, went
from 35 percent to over 44 percent and above. Miguens said that
instead of taking advantage of the world's strong demand for
agricultural commodities, the government took measures to discourage
production and reduce exports. The country lost more money during
these four months as a result of the farm dispute than what the
government aimed to collect with the new tax increase.

-----------------------------------
Pessimistic over Government Signals
-----------------------------------

4. (SBU) When asked if he considered the farm problem overcome
after the Senate voted against Resolution 125, he seemed
pessimistic. A week after the government's defeat in Congress, the
newly appointed Secretary of Agriculture, Carlos Cheppi, stated that
he would only receive the farm organizations individually and not as
a group (the Mesa de Enlace). Cheppi did not invite the farm groups
to his swearing in ceremony and immediately announced that he would
not attend the official inauguration of the Palermo Show, as most
Secretaries have done in the past and even most Presidents. The
government also lifted all official stands at the show and convinced
several provincial governments to do the same. At the time the
meeting took place, the Secretary of Agriculture had not called the
farm sector leaders to a meeting. (The invitation came a week later
and he did receive all farm leaders.)

--------------------------------
Unity of the Farm Sector was Key
--------------------------------

5. (SBU) Miguens highlighted the importance of having the four most
representative farm groups continue working together on common
problems and lobbying the government to develop a comprehensive
policy for the farm sector. Despite different political and
economic leanings among the farm groups, the farm groups united in
response to the government's tax pressure, increased controls and
marketing limitations, and the lack of long term agricultural
policies. He also indicated that the government tried, to no avail,
to break the unity of the farm groups by offering separate measures
for small producers and those in more remote regions. Miguens said
he expects the farm organizations will continue to work together,
although he felt that trying to create an official unified farm
entity could bring more problems than solutions.

------------------------------------
Urban Support for the Farm Sector
------------------------------------

6. (SBU) Miguens also told the Ambassador that during the farm
strike the agricultural sector was surprised by the strong support
received from the public in large cities. Much of this support was
a result of the government's poor management of the crisis. The
farm sector now realizes the importance of working closely with
politicians, especially rural town mayors, and senators and
congressional representatives. When asked what he thought would
happen in next year's mid-term elections, Miguens indicated that one
of the farm's sector main challenges is to maintain this strong
support through October 2009.

-------------------------------------------
Carlos Cheppi, New Secretary of Agriculture
-------------------------------------------

7. (SBU) Miguens described newly appointed Secretary of Agriculture
Cheppi as a good technician well known to the farm sector. As
former president of INTA (the National Institute of Agricultural
Technology), the major farm groups had worked closely with him in
the past. He mentioned that Cheppi had developed a good relation
with Venezuela while directing INTA projects to provide agricultural
technical advice in Venezuela.

-------------------------------
More Controls, More Limitations
-------------------------------

8. (SBU) Miguens stated that once the Palermo show was over, the
farm organizations would start focusing on addressing the numerous
measures that the government, mainly through ONCCA (the National
Control Entity for Agricultural Commercialization), had implemented
during the last four months of the farm strike. New regulations
gave the government greater authority to control exports across a
broad range of agricultural products. The government is using these
regulations restrict exports and keep down the domestic price of
beef, dairy products, corn, wheat and other agricultural products.
Miguens' SRA is also concerned about legislation being prepared in
the Congress, which would create an official entity with the power
to buy and sell agricultural commodities.

------------------------
Rural Society of Argentina
------------------------

9. (U) The SRA was created in 1866 to represent the traditional
large landowners of Argentina. It currently has almost 10,000
members, mostly devoted to livestock production and farming.
Miguens will finish his second term in September and will be
replaced by Hugo Biolcati, current vice president. The SRA played a
key role as one of the members of the Mesa de Enlace, the joint
group of the four most important local farm groups (together with
Confederaciones Rurales Argentina, Federacion Agraria Argentina and
Coninagro), during the 4-month long farm strike.

10. (U) At the end of the meeting, Miguens thanked Ambassador Wayne
for his visit. Both noted the importance of having good relations
between neighbors, since the SRA's Palermo show fairground borders
the Embassy.

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

11. (SBU) Comment: The repeal of the variable export tax in July was
not the end of the differences between the GOA and the farm sector.
The farm groups are now pushing to address other concerns at a time
when the GOA seems to be determined to maintain strong controls over
the strategic agricultural sector. The GOA has decided to back off,
at least for now, on increasing agricultural export taxes, but this
and other issues are likely to be at the forefront of relations
between the rural sector and the government between now and the
legislative elections in 2009. End Comment

WAYNE

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