Conflict with farmers takes toll on Argentina

Posted in Latin America | 24-Jun-08 | Author: Alexei Barrionuevo| Source: International Herald Tribune

Argentine border police fire a water cannon on a farmer waving the national flag during a farmers' protest blocking Highway 14 in Gualeguyachu, 150 miles north of Buenos Aires.

ROSARIO, Argentina: Country roads and highways swelled with trucks bearing grains and gasoline over the weekend, as Argentina's farmers cleared the highways after lifting their fourth strike in three months.

While hope sprang eternal here in Santa Fe Province that food rationing and gasoline shortages would finally ease, the latest chapter in the political drama began playing out in Buenos Aires, where the embattled president, Cristina Fernández de Kirchner, met with farm leaders late Monday.

Argentina's Congress is expected to begin a thorny debate this week on an export tax, which touched off the farmers' revolt more than three months ago. In a long-awaited concession, Kirchner, her popularity plummeting in opinion polls, agreed last week to let Congress approve or reject the system of sliding taxes that she imposed on farmers in March.

Yet even if Congress can resolve the export tax dispute, the conflict has already struck a deep blow to Argentina's economy, to its international reputation as a major food supplier and to the psyche of its 40 million people.

"In just 100 days this has become like another country," said Cristian Zarate, a farmer in Armstrong, a town about an hour from Rosario, Santa Fe's capital. "Whatever happens now, the damage has already been done."

Argentines struggled last week with mounting food shortages in the provinces and with rationing in Buenos Aires. Despite attempts to block only trucks hauling grains for export, truckers, concerned about lost income, mounted their own strikes earlier this month, causing many markets to run low on food, further escalating the political conflict.

"We are sick and tired of this," Mercedes Alzogaray said in disgust last Thursday as she shopped at a supermarket in Abasto, a working-class Buenos Aires neighborhood. "We can buy so little meat, there is nothing, no food these days."

Government signs in Buenos Aires shops warned of "maximum" quantities of food shoppers could purchase. The restrictions allowed Alzogaray to buy only two packages of meat for her family, when she would normally buy six or seven, she said.

Food prices have shot up since the farm strikes began, doubling in some places, causing consumers to react skittishly. At the sprawling Central Market outside of Buenos Aires where many of the country's fruits and vegetables are distributed, Javier Frazzetto, 30, a vendor, said business was down by half since March. "People have a lot of uncertainties about eating, about spending on food," he said.

For many Argentines the farm crisis has stirred nightmarish memories of the crushing economic crisis of 2001, when the value of the country's currency plummeted in days, causing many to go hungry.

Many Argentines, like Alzogaray, believe that inflation is spinning out of control.

"This has caused a vicious cycle," said Dante Sica, director of, an economic consultancy in Buenos Aires. "Inflationary expectations have risen with a lot of people, and consumption is slowing, especially in the provinces."

Sica estimated that food prices had risen 30 percent nationally since last year, while overall inflation was about 20 percent ? twice what the government has claimed.

In provinces like Santa Fe and Cordoba, home to much of Argentina's agricultural production, grocery store shelves went bare and factories slowed production as orders dried up.

An economy that has grown annually by about 8 percent since 2003 is expected to cool now. Sica said he was forecasting no more than 6.5 percent growth in 2008 and even less in 2009. Some international banks, among them Barclays and JPMorgan Chase, have also downgraded their growth expectations for the country this year.

Argentina also faces the challenge of convincing buyers of its grains, especially in Asia, that it is a reliable supplier. Nearly 60 ships were waiting at Argentine ports on Monday to finally receive soybeans and grains. Many had been waiting to load for many days, with delays costing as much as $60,000 a day.

"Argentina is quickly losing its appeal as a reliable supplier," said Daniel Basse, the president of AgResources, an agricultural consultancy in Chicago.

Major international grain companies like Cargill and Bunge tried to stockpile grain after the first strike, but they underestimated the intensity of the conflict, Basse said. There have been four strikes since late March. The volume of grains delivered by trucks to ports in Santa Fe Province in the past three months is down 42 percent from last year, said Patricia Bergero, the assistant director of economic studies at the Rosario Board of Trade.

Kirchner's approach to resolving the crisis has often been to fan the flames of conflict. Last week, just two days after tens of thousands of people held antigovernment protests throughout the country, she attacked the leaders of the four major farmer associations at her own rally in Buenos Aires, dismissing them as "four people whom nobody voted for."

She has previously referred to them as "coup plotters."

The president made no reference to the owners of thousands of small and medium-size farms who have been at the heart of the conflict over taxes that the farmers claim have squeezed their profit margins amid rising costs for fertilizer and other supplies.

Kirchner met with farm leaders late Monday. In televised remarks, Alberto Fernandez, the cabinet chief, described the 90-minute meeting as "positive" but said the president declined to discuss the floating-rate export taxes, saying they were "in the hands of Congress."

Farm leaders asked that the taxes, which move with international commodity prices, be temporarily suspended while Congress tackles the issue. The president and her husband, former President Néstor Kirchner, who now heads the Front for Victory wing of the Peronist party, have insisted that the export taxes, or retenciones móviles, are necessary to help fund social programs for the poor and to help stem inflation.

Farmers are suspicious that the president will allow a debate on the export-tax issue in the Peronist-controlled Congress to legitimize the program. Augustin Rossi, who leads the Front for Victory delegation in Congress, has insisted in recent days that there will be a chance to modify the tax. Many analysts and politicians here in Santa Fe believe the government will offer a compromise.

The road blockades have affected more than just pocketbooks and refrigerators. Claudio Spallina and his wife, Magali Mollar Spallina, were on their way to a hospital when she was about to have a baby two weeks ago when they were stopped by strikers in Cordoba.

Spallina said that when he told the strikers they had to pass, they smashed their windows. He eventually maneuvered around the roadblock and made it to the hospital, but he said his wife was so upset, she had to have a Caesarean section.

Their baby boy is fine but the couple are still shaken up. "Magali does not want to get back on the roads," Spallina said. "She is terrified and traumatized. We both are."