Tensions Continue to Run High in Argentina

Another farm strike is likely.

Published on: Sep 29, 2008

The Rural Society, Argentina's largest farm group, changed leadership Thursday. Hugo Biolcati, a vocal critic of the government, has taken over amid threats of another farm strike.

Strikes earlier this year crippled the transportation and food as farmers blocked roads and protested the sliding-scale tax provisions on soybean exports instituted by the government. The strikes forced a vote in Congress on the law, and it was overturned returning the tax to the previous fixed rate. However conflict between farm groups and the government continues, with many farm groups threatening to renew strikes.

Arlan Suderman, Farm Progress market analyst says to a great extent the government is trying to redistribute wealth to the lower income sector of society and is trying to fund many of its social programs on the backs of farmers.

"Argentina has a very fertile agricultural area, a very productive agricultural industry that left to itself, could really flourish and be a major force in the world economy," Suderman says. "The Argentine government has many social programs it would like to maintain and sees this healthy agriculture sector as a place where it can siphon off resources in order to fund its social programs."

Suderman says that is stifling production in agriculture, limiting production below what it could be and inhibiting growth in the ag economy. Although farmers won their battle earlier this year on the export tax, it is still a heavy burden.

"The export tax on soybeans rolled back to 35%; 35% is still an awfully strong tax on soybean exports," Suderman says. "That's what continues to aggravate farmers. It's not just the export tax on soybeans, but that's kind of the poster child of the conflict that they have with the government."