June 1, 2012 / 1:37 AM / 7 years ago

UPDATE 2-Farmers call strike as Argentine tax bill passes

* Lawmakers in top grains province approve land tax hike

* Farmers to halt grain sales from Saturday for nine days

* Soybean, corn growers say tax hike will erode profits (Updates with Senate passing tax increase)

By Nicolás Misculin

BUENOS AIRES, May 31 (Reuters) - Growers in Argentina’s top agricultural province will halt sales of grains for nine days to protest against a tax hike passed by the local Congress on Thursday, threatening corn and soy exports from a leading global exporter.

Cash-strapped Buenos Aires province is the country’s biggest producer of soybeans, corn and wheat, and the protest might affect grain shipments if exporters run short on stocks. Ports and soy-crushing plants usually have several days supplies.

Farmers said they would freeze sales of grains and livestock from Saturday to June 10 over the provincial government’s push to raises taxes on the region’s fertile farmland, a step they say will put some growers out of business.

“Today is an unfortunate day that’s ended with the start of the strike measure that we’d sought to avoid to the very last,” Hugo Biolcati, head of the Argentine Rural Society (SRA), said outside the provincial Congress in the city of La Plata.

The SRA was among four groups that led months of anti-government protests over a hike in export taxes in 2008, one of the biggest challenges of President Cristina Fernandez’s five-year rule. The crisis shook local financial markets and pushed international food prices up as exports dried up.

Dozens of farmers, some shouting and waving the white-and-blue national flag, demonstrated in front of the legislature as lawmakers passed the tax increase bill, which Governor Daniel Scioli says is long overdue and will not hurt most growers.

Scioli, seen on Wall Street as a possible market-friendly successor to Fernandez in a 2015 presidential election, says rural land valuations have not been adjusted since 1955 and should reflect the huge price rises of recent years.

Strong global demand for Argentina’s grains and biodiesel shipments has pumped up the cost of farmland in the South American nation, the world’s top supplier of soyoil and meal and the No. 2 corn provider after the United States.

Members of Scioli’s government played down the impact of the tax hike and said growers who have lost crops this season to drought and - more recently - flooding would not see their tax bills rising.

“I’m urging the farmers to rethink this and I’m inviting them to try and resume talks on this,” said Gustavo Arrieta, the country’s farming minister.

Scioli, a mild-mannered centrist member of Fernandez’s Peronist party, has said he would like to run for president in 2015 if Fernandez’s allies do not try to change the constitution to allow her to seek a third term.

Keeping the vast province’s finances afloat at a time of slowing revenue growth and double-digit inflation will prove crucial to Scioli’s popularity, but he will also be keen to avoid a messy conflict with the farmers.

Many of Argentina’s provinces are running budget deficits and struggling to pay wages and providers on time, partly due to reduced transfers from the central government. (Additional reporting by Juliana Castilla; Writing by Helen Popper; Editing by Ed Davies)

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