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02/05/2008 | Partial Agricultural Accord Eases Tension in Argentina

Global Insight Staff

Partial agreements on wheat and meat exports were inked yesterday by the government and the agricultural sector, going some way towards easing tension between the two embattled parties; it remains to be seen whether these will suffice to secure a postponement of tomorrow's deadline for the resumption of protests.

 

Global Insight Perspective

 

Significance

The government agreed on the restarting of meat and wheat exports yesterday, thereby securing a key positive step in negotiations with the agricultural sector ahead of the end of the truce on mobilisations tomorrow.

Implications

The accords also contribute to fostering a more positive background for continued talks since the majority of issues still remains to be settled, notably the highly sensitive sliding-scale tax on selected agricultural commodities' exports.

Outlook

During the 30-day suspension of the strike by farmers, progress on negotiations has been minimal; however, the looming deadline for protests to restart seems to have pushed the government into enacting more tangible measures so as to secure a postponing of the deadline or, at the very least, ensure that protests will fall short of the scale of the March disruptions.

A Step in the Right Direction

The agricultural sector and the government made some progress on negotiations yesterday as they struck agreements allowing for the reopening of both meat and wheat exports. Meat-export flows should therefore return to normal from tomorrow onwards; however, further details on the volume and the date for wheat exports to resume have yet to be revealed—both of them depend on the estimated production volume available to send abroad. In any case, farmers were guaranteed yesterday the payment of the full value for their wheat production. The head of the government's negotiating team, Cabinet Chief Alberto Fernández, hailed the accords as a success, while leaders of the main farmers' organisations present at yesterday's meeting—the Rural Confederation of Argentina (CRA), the Argentine Rural Association (SRA), the Argentine Agrarian Federation (FAA), and the Agricultural Inter-Cooperative Confederation (CONINAGRO)—unanimously expressed satisfaction on the great strides made.

Nevertheless, much remains to be negotiated, and it was thus agreed that farmers' and government's representatives would reconvene next Tuesday (6 May) to discuss the highly sensitive export-tax system applicable to a series of agricultural commodities. Upon its coming into force, the new sliding-scale regime translated into substantial tax increases on soy and sunflower-seed exports, leading major agricultural organisations to unite and stage a landmark 21-day strike. The actions resulted in severe food-supply disruptions nationwide and grew to be the first political and operational challenge to the presidency of Cristina Fernández de Kirchner (2007-2011). The new export-tax regime dealt the final blow to the patience of the sector, disgruntled in recent years over former president Néstor Kirchner (2003-2007)'s interventionist policy. It is to be noted that, to date, the government has refused to budge on the export tax issue, thus presaging difficulties ahead in next week's meetings. Along with this key question, Tuesday's talks will also address general short- to long-term agricultural policy considerations.

Outlook and Implications

End of Truce Looming

After their protracted protests in March, farmers' organisations agreed to a 30-day truce so as to create a more favourable backdrop to talks with the government. This temporary suspension of protests formally comes to an end tomorrow, and it is not yet clear whether strike action will resume. Agricultural leaders announced yesterday that their respective organisations will hold assemblies to decide on the question of whether or not to protest once more. The government was eager to flag yesterday's accord as a key step towards ensuring a postponing of the 2 May deadline. If protests do resume tomorrow they are not expected to mirror the scale of the strikes and supply disruptions experienced in March, as the sector is openly keen not to jeopardise its dialogue with the authorities.

Overall the 30-day truce was characterised by slow, patchy advances in talks, with the agricultural sector expressing major discontent on both the pace and content of negotiations. However, the looming deadline seems to have stung the government into action, opening the way for the first accords—though partial—to be inked yesterday. Tensions have eased but remain latent, with next week's talks gearing up to be a defining moment in government-farmers relations.

Global Insight (Reino Unido)

 


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