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Argentina Ag Strike Latest Price Controls Battlefield

08 December 2006

ARGENTINA - Argentine Economy Minister Felisa Miceli has described this week’s nationwide agricultural sector strike as the biggest in 20 years.

But unless farm groups extend their supply cuts beyond Monday’s deadline, they are unlikely to inflict the kind of pain needed for any lasting political effect. The reason: meatpackers had stocked up ahead of the strike, allowing them to keep the steaks flowing to a nation that consumes more beef per capita than any other, and with minimal impact on prices.

But even if the strike passes without crisis, the farmers’ main complaints - over everything from domestic price controls to export restrictions and taxes - won’t subside any time soon. Nor will the conflict go away.

The government is unlikely to permit higher domestic prices ahead of President Nestor Kirchner’s presumed reelection bid in October. Many observers even believe Kirchner will stick with the controls after his expected reelection, because he sees the interventionist program as successful.

The Kirchner administration and farmers have a strained, yet symbiotic relationship. Taxes on Argentina’s heavy soy exports have filled state coffers in recent years, while government policies to maintain a weaker peso and subsidize diesel prices have favored farmers.

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