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ECONOMY | 05-03-2020 21:56

Farmers unions call four-day strike after rise in soy duties

Four producers' unions say they will halt grain and livestock trading for four days and go on strike, starting from Monday, in response to a rise in duties imposed by President Alberto Fernández.

Four famers unions announced Thursday they will launch strike action after the government of President Alberto Fernández increased tariffs on soybean exports, just three months after already hitting the agricultural sector with higher taxes.

The four' unions said they would paralyse grain and livestock exports for four days in outright rejection of an increase from 30 percent to 33 percent in duties on foreign sales of soybeans and derivatives, in the first strike since Fernández took office last December.

Soy is Argentina's biggest export commodity. The industrial action announced by the four farming employers federations will be the first to hit the Peronist leader since he assumed power in December.

When Fernández took over, he imposed 30 percent tariffs on soya exports and 12 percent taxes on other agricultural products such as maize and wheat as part of a plan to tackle an economic crisis.

The latest tax increase was published in the government's Official Gazette on Thursday following days of meetings between Agriculture Minister Luis Basterra and representatives of the farming sector.

Tensions

Peronist tensions with the agricultural sector carry echoes of the past. In 2008, then-president Cristina Fernández de Kirchner (currently vice-president) – provoked a clash with agricultural businesses by ramping up export taxes. The country was practically paralysed by the ensuing protests, with demonstrations lasting three months and tractors blocking roads. Eventually, Fernández de Kirchner sent a bill to Congress on her proposal and lost the vote.

Fernandez, who was Cabinet chief at the time, resigned.

"Once again it will be the countryside that will pay the debts and costs of a crisis we didn't generate," said the Rural Society of San Pedro, one of the most active agricultural interest groups during the 2008 face-off.

Fernández deplored the strike and told the local press, "We already negotiated, but they always want to win.”

Basterra pointed out the tax hike "respected territorial and social equity" by establishing differential values in levvies, so that large landowners pay more and smaller producers less.

With less than 90 days in power, the Peronist head of state called last Sunday in Congress for wealthier producers to make an extra effort to restore an economy that has been in recession for nearly two years.

High tension conflict

After introducing a food stamp programme to tackle hunge,r in a country with more than 35 percent poverty, Fernández is now embarking on key governance negotiations with the IMF and creditors, seeking to avoid a new default on US$323 billion of public debt, which equates to around 91 percent of GDP.

The president believes that Argentina cannot pay the debt if the country does not grow. The IMF – which the government owes US$44 billion – agrees, saying last week that Argentina's "debt is not sustainable" and that it is not "economically and politically feasible" to implement further fiscal adjustments. The IMF has asked Argentina's creditors to accept either capital or interest haircuts, or both, to facilitate a way out.

Argentina is one of the world's largest suppliers of food. The government's plan applies the maximum withholding or export duty tax to producers of more than 1,000 tons of soybeans, with differential scales decreasing to the smallest, up to a minimum of 21 percent.

"Of the 25 crops in Argentina, we raised the retentions to only one, soybeans," the Frente de Todos leader declared in last Sunday's speech to Congress.

Two months ago, soybean exports were taxed at 30 percent and the rest of the agricultural products, such as corn and wheat, at 12 percent.

Strikes on the roads

At least one agricultural union has called for road blockades in response. The  transportation of goods and grains in Argentina depends on these vital corridors. "We will meet on the roads," said the Confederaciones Rurales Argentinas (CRA) in a statement.

"The decision to go on strike is regrettable. Alberto is trying to reconcile this with his protest. There are some producers who have a vocation for opposition," noted the former president of the Argentine Agrarian Federation (FAA), Eduardo Buzzi.

In 2008, Buzzi was a strong reference point in the campo's struggle against the Fernández de Kirchner administration.

Speaking to El Destape Radio, the said he was "surprised – I have contact with some of the current directors and I don't understand at what point they accepted to be part of this protest.”

Argentina is the world's leading exporter of soybean flour and reached that position in soybean oil in 2019.

- TIME/AFP/NA/PERFIL

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