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Viewing cable 08BUENOSAIRES592, ARGENTINA: AGRICULTURAL NEGOTIATIONS MAKE LITTLE PROGRESS

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Reference ID Created Released Classification Origin
08BUENOSAIRES592 2008-05-06 20:16 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Buenos Aires
VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0592/01 1272016
ZNR UUUUU ZZH
R 062016Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0950
INFO RUCNMER/MERCOSUR COLLECTIVE
UNCLAS BUENOS AIRES 000592 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV EAGR ECON ELAB ETRD AR
 
SUBJECT:  ARGENTINA: AGRICULTURAL NEGOTIATIONS MAKE LITTLE PROGRESS 
 
REF:   (A) Buenos Aires 00328; (B) Buenos Aires 00368; (C) Buenos 
 
Aires 00379; (D) Buenos Aires 00386; (C) Buenos Aires 0398; Buenos 
Aires 408; Buenos Aires 415; Buenos Aires 540 
 
1. (SBU) Summary: Based on limited progress in agricultural 
negotiations, farm sector leaders extended their truce with the GOA 
from May 2 to May 6, but in the absence of any additional progress 
it appears likely that strikes will resume in some fashion.  GOA and 
farming leaders did not reach agreement on variable-rate export 
taxes (the priority issue in negotiations), nor have wheat or beef 
exports resumed despite earlier reports of government agreements to 
allow them.  Farm leaders stated they will take no additional action 
to disrupt commerce before May 7 beyond the protests already 
organized.  Any measures taken after that date will depend on 
progress in negotiations.  Farmers say they hope to avoid a repeat 
of food shortages that risk reducing public support.  The Kirchner 
Administration has been unyielding, with nary a concession in sight. 
 (Press articles cite Nest Kirchner as saying privately he wants the 
rural leaders on their knees.)  The result has been minimal progress 
at the negotiating table.  Talks continue late May 6.  End Summary. 
 
Wheat Exports Open? 
------------------- 
 
2. (U) Under the wheat agreement reached between the rural sector 
leaders andthe government, the GOA has agreed to open exports for 
100,000 tons to Brazil (Argentina has an estimated 1.2 to 1.5 
million tons left to export from this year's crop) and will press 
wheat exporters to pay higher prices to producers.  As of May 6 this 
agreement is still pending implementation. 
 
Beef Exports Open 
----------------- 
 
3. (U) On May 5, new Economy Minister Carlos Fernandez announced the 
reopening of beef exports, although contacts in the industry 
indicate that actual shipments were negligible and one daily 
headlined May 6 that exports had not resumed.  Rather than fully 
liberalizing beef exports, the new regulation actually expanded the 
authority of the GOA to restrict exports of beef and beef products 
in the future.  The revised regulation failed to include the 
previous week's agreement with farm groups to allow more cooked beef 
exports and increase the export quota. Control of beef exports will 
now be in the hands of the National Bureau of Agricultural Trade 
Control (Oncca), headed by Ricardo Echegaray, a former Customs 
Director. 
 
Agricultural Sector Response 
--------------------------- 
 
4. (U) So far agriculture groups have organized several protests 
since the formal end of the truce in the farm strike on May 2, but 
agreed that they will not block the highways or take other measures 
to disrupt commerce (at least for now).  Rural sector leaders are 
critical of the beef export terms, and remain skeptical about the 
eventual implementation of any agreement reached with the GOA.  At 
the same time, they appear anxious to avoid giving the GOA any 
excuse for breaking off the wider negotiations May 6.  Leaders 
stated they will take no additional action before May 7, and any 
measures taken after that date will depend on progress in 
negotiations.  Farm leaders emphasize that they want to avoid food 
supply disruptions in major cities and will not resume a total 
blockade of major roads.  One option under consideration is to block 
trucks moving soybeans and grain to the export terminals in order to 
prevent the GOA from collecting the export tax.  The farm groups 
are, however, under heavy pressure from their members to take 
action.  One local group is currently blocking movement of 
agricultural products on a major road close to the city of 
Reconquista in northern Argentina. 
 
Administration Tactics - More of the Same 
----------------------------------------- 
 
5. (SBU) For the Kirchner administration, the stakes in the 
confrontation with the agricultural sector quickly became political 
as CFK's team apparently decided that any concession to the striking 
farmers would be viewed as a sign of weakness.  When Economy 
Minister Martin Lousteau was forced out, there was some speculation 
that the Kirchners would use him as a scapegoat and seize his 
departure as an opportunity to retract some of their agricultural 
policies.  The Kirchner Administration has been unyielding, however, 
with nary a concession in sight.  Local press reports target 
ex-President Nestor Kirchner as taking the toughest line.  They 
quote him as privately saying he wants the agricultural sector 
leaders on their knees before an agreement is reached and report 
that he has vetoed several concepts for agreement emerging from 
talks.  The result has been minimal progress at the negotiating 
table, with no further progress expected in the negotiations May 6, 
though talks continue late in the day. 
 
Comment 
------- 
 
6. (SBU) We do not see an imminent breakthrough in negotiations, and 
farm groups will be under heavy pressure from their members to take 
action.  Both sides appear to be preparing for a long dispute and 
are looking for ways to retain public support should strikes resume. 
 The agriculture sector is considering resorting to only partial 
blockades in order to avoid food shortages and public ire, while the 
Administration in the form of President Cristina Fernandez de 
Kirchner continues blaming the farm organizations' last strike and 
its food shortages for rapidly rising inflation. 
 
WAYNE