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Viewing cable 08BUENOSAIRES860, ARGENTINE FARM STRIKE SUSPENDED, GRAIN TRADE RESUMES

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Reference ID Created Released Classification Origin
08BUENOSAIRES860 2008-06-23 22:21 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Buenos Aires
VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0860/01 1752221
ZNR UUUUU ZZH
R 232221Z JUN 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1404
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 000860 
 
USDA FOR FAS/OA/OCRA/ONA/OGA/OFSO 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958:  N/A 
TAGS: EAGR ECON EINV PGOV ELAB PHUM AR
SUBJECT: ARGENTINE FARM STRIKE SUSPENDED, GRAIN TRADE RESUMES 
 
REF: Buenos Aires 0829 and previous 
 
1. (SBU) Summary:  Agricultural producers formally suspended the 
farm strike, and trucks carrying grains, oilseeds, and cattle 
started to arrive at processing plants and export terminals over the 
weekend.  Producers and truckers have lifted most of the roadblocks 
around the country and, unlike the last strike suspension (two weeks 
ago), it appears that some normal trade is resuming this week.  The 
dispute over the variable export tax continues, but the battlefield 
has changed, as both sides focus on the Argentine Congress to decide 
the issue.  Faced with some wavering in its ranks, the GOA now 
admits that it may be necessary to make some changes in the proposal 
it submitted to Congress for ratification, but continues to insist 
that the basic variable export tax is untouchable.  It remains to be 
seen whether the GOA will agree to modifications to the draft law 
acceptable to the farm sector to resolve the crisis or will try to 
use its large majority to ensure that the Congress simply ratifies 
the export tax.  Producers are no longer on the highways, but they 
could return quickly  if Congress simply approves the current export 
tax system.  End Summary. 
 
------------------- 
Grain is Now Moving 
------------------- 
 
2. (SBU) Farm groups leading the agricultural strike formally 
suspended it at midnight on June 20 in order to concentrate on 
lobbying Congress to make changes in the government's variable 
export tax proposal.  Contacts in the grain trade report that 
substantial amounts of grains and oilseeds are now moving to the 
main processing plants and export terminals.  Movement of trucks 
with grains and oilseeds started slowly on June 21 and has picked up 
since then.  Volumes entering Argentine ports on June 23 were still 
not up to normal, but the grain trade is in the process of 
normalizing.  This is a major change from the last time the strike 
was suspended two weeks ago, when almost no movement of grain took 
place due to farmers holding back grains and a decision by truckers 
to continue blocking highways.  Contacts report that the grains 
being delivered were previously contracted for sale, but that 
producers had been unable to make deliveries for the last 45 days 
because of the farm dispute.  Prior to the suspension of the strike, 
a reported 120 ships were delayed in Argentina, accumulating 
substantial demurrage charges while waiting to load and transport 
grains and oilseeds. 
 
3. (SBU) Movement of other products has also started to normalize as 
producers and truckers lifted roadblocks throughout the country. 
Fuel trucks are now reaching rural areas and cities that were 
suffering shortages due to the blockades, and supermarkets that were 
suffering spot shortages are now able to resupply.  The livestock 
market in Liniers (the main market outside of Buenos Aires) on June 
23 had its busiest day since 1991, with 27,000 head of cattle being 
delivered for sale.  This is substantially more than the 10,000 
cattle delivered during the entire preceding week.  Producers took 
advantage of the break in the strike to sell cattle that have been 
ready for market for some time.  Many were anxious to sell their 
cattle due to very dry weather that has limited the amount of 
pasture available. 
 
-------------------- 
All Eyes on Congress 
-------------------- 
 
4. (SBU) The battlefield in the debate over variable export taxes 
has now changed to the Congress (reftel).  While the government has 
a large majority, it faces heavy pressure from producers and members 
of its own coalition to make changes in the variable export tax 
regime.  The GOA has backed down from its original position that the 
Congress should approve the government proposal without 
modifications ("not even a comma").  It continues to insist, 
however, that any modifications leave intact the variable export tax 
regime (the export tax was 46 percent on June 20) and that changes 
be limited to supplemental measures to address other concerns of 
producers, including modifying export restrictions currently in 
place for wheat, beef, and dairy, as well as possible input 
subsidies. 
 
5. (SBU) The Congress started debate on the variable export tax on 
June 23 amidst heavy lobbying by producers and elected officials 
from agricultural regions.  President Fernandez de Kirchner (CFK) 
also agreed to meet with the four main farm leaders the same day in 
an effort to rebuild confidence.  She had criticized the same farm 
leaders the previous week for blocking highways (reftel).  The farm 
leaders will reportedly ask that the government suspend the export 
tax until it is approved by Congress, and will request discussions 
on other agricultural issues such as dairy products, livestock 
production and other products affected by heavy government 
intervention to maintain low domestic prices. 
 
6. (SBU) COMMENT:  The decision of CFK to send the variable export 
tax to the Congress has significantly eased tensions in Argentina. 
While it is highly unlikely that the CFK administration will agree 
to the farm organizations' request to suspend variable export taxes 
pending Congressional consideration, it remains to be seen whether 
the GOA will agree to farm-friendly modifications to the draft law 
to resolve the crisis or will try to use its large majority and 
power of the purse to ensure that Congress simply ratifies the 
export tax.  For the five years the Kirchners have been in power, 
they have pushed through legislation virtually at will.  Times have 
changed.  This is their first test in maintaining party discipline 
in this new situation.  For example, the provinces most deeply 
involved and affected by the crisis account for more than half of 
the deputies in the Congress.  Contacts in rural areas report that 
mayors who came out in support of the government during this dispute 
have been forced to run their municipalities from Buenos Aires due 
to their rural constituents' hostility, and numerous deputies voting 
with the government would likely face the same fate.  On the other 
hand, Nestor Kirchner (in his peronist party role) and others are 
working hard to maintain deputies' loyalty.  Producers are no longer 
on the highways, but they could return rapidly if they are unhappy 
with the outcome in Congress.  END COMMENT. 
 
WAYNE