Argentina farmers ready to revolt again

NY Times:

When the government decided in March to raise taxes on farmers’ profits, it set off a rural revolt in Argentina. For three weeks enraged farmers blocked roads nationwide, paralyzing grain and meat sales and causing food shortages.

Since then, the government has been trying to quell Argentina’s restive farmers at the negotiating table. But farmers like Marcelo and Pablo Marchetti, brothers in this country’s lush grain belt west of the capital, say the talks are going nowhere and are yet more proof that President Cristina Fernández de Kirchner, in office just four months, does not understand them.

They are preparing to resume crippling strikes of grain exports once the deadline for the talks expires on Friday. Some farmers have already spontaneously put up roadblocks in recent days.

“They don’t want to listen to us,” said Pablo Marchetti, 40, whose Italian great-grandfather founded this town of 1,500 a century ago. “In the short term, I just don’t see them finding a logical solution to this whole problem.”

The farmers say they are concerned not only about profits, though the steeper taxes have cut into them. They also say Mrs. Kirchner’s policies are threatening to reverse one of the great agricultural booms in Argentina’s history and to snuff out a technological and entrepreneurial revolution that has made the country a leading food source in a world racked by hunger and rising food prices.

“We have an enormous historic opportunity to grow as a country, but the government wants to punish a sector that should continue to be an engine of growth,” said Marcelo Marchetti, 39. “The world has opened its doors to us, and here we are fighting among ourselves.”

Tensions with the farmers exploded with unusual ferocity here, farmers say, in part because the new taxes touched a nerve in a nation where past governments used the farm sector to redistribute wealth to the poor.

Mrs. Kirchner’s politics have stirred memories of Gen. Juan Domingo Perón, who in the early 1950s used profits from agricultural exports to industrialize the country and lift the poor. Trying to check inflation that independent economists put at close to 20 percent, Mrs. Kirchner, too, turned to farm profits and export controls, looking to increase subsidies for the poor and food supplies at home.

Farmer discontent had been growing since at least 2006, when Néstor Kirchner, her husband and predecessor as president, limited beef exports to ensure a cheap supply at home. Once a dominant meat supplier, Argentina has watched as Brazil has passed it by, building the world’s largest beef export industry. Last year, even their tiny neighbor Uruguay exported more beef per capita than Argentina.

Rural angst reached a boiling point in early March when the government increased export tariffs for the second time since October. The policies have also set de facto ceilings on prices.

Mrs. Kirchner has criticized Argentine farmers as focusing too much on cash crops like soybeans at the expense of products needed for Argentine consumption, like dairy and meat. Soy exports have grown by 263 percent since 1997, to 11.5 million tons last year. She cast the farmers as greedy oligarchs in 4-by-4 vehicles, and as unpatriotic plotters intent on overthrowing the government.

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Daniel Kerner, an analyst with Eurasia Group, a consulting firm, said the rigidity of the government’s position is rooted in its need to “regain its political standing and avoid looking weak.”

But opinion polls suggest Mrs. Kirchner’s uncompromising line on the farm revolt has damaged her popularity. She is making the political gamble that the farmers will not be able to mount strikes with the intensity and unity they managed before, analysts said.

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But where Mrs. Kirchner’s government sees political survival, the Marchetti brothers see a potentially lost opportunity for the country to prosper from a historic boom in commodity prices.

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The farmers are right on this one. What is happening is a clash between control freak government policies and the free market. Those government policies are driving down exports that could make the country richer. The wealth accumulated by the exporting farmers could benefit all the citizens of Argentina through increased consumption and investments.

The farmers would have an incentive to invest in greater productivity which would create jobs and also require the purchase of equipment. Instead the government wants to take their profits and invest in the sink hole of government handouts making the country poorer and taking away incentives from those receiving the handouts as well.

The government "negotiations" appear to be a bad faith attempt to stall the effects of the farmers strike. Screwing the farmers for political gain is counterproductive. Hugo Chavez appears to be getting his money's worth out of his investment in this control freak government.