VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #1656/01 2062106
ZNR UUUUU ZZH
R 252106Z JUL 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 5355
INFO RUEHAC/AMEMBASSY ASUNCION 5624
RUEHBR/AMEMBASSY BRASILIA 5426
RUEHCV/AMEMBASSY CARACAS 0940
RUEHLP/AMEMBASSY LA PAZ JUL MONTEVIDEO 5701
RUEHSG/AMEMBASSY SANTIAGO 5224
RUEHRI/AMCONSUL RIO DE JANEIRO 2030
RUEHSO/AMCONSUL SAO PAULO 2949
RUEHRC/USDA FAS WASHDC 2254

UNCLAS BUENOS AIRES 001656 
 
SIPDIS 
 
SIPDIS 
 
FOR WHA/BSC AND EB/ABT 
USDA FOR FAS/CMP HOWARD WETZEL 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD ECON AR
SUBJECT: ARGENTINE AGRICULTURE PRODUCERS STRIKE TO PROTEST 
GOA INTERFERENCE IN SECTOR 
 
REF: A. 05 BUENOS AIRES 2303 
     ¶B. BUENOS AIRES 560 
     ¶C. 05 BUENOS AIRES 2408 
 
¶1. (U) This message is sensitive but unclassified, and not 
for Internet distribution. 
 
¶2. (SBU) Summary: Argentina's agricultural producers mounted 
a four-day strike to protest the GOA's policies toward the 
sector, which include export taxes and market manipulation. 
Strikers described their action as an attempt to get the 
government's attention, and downplayed the likelihood that it 
would lead to policy changes.  While it is probably true that 
the strike will not prompt the GOA to ease up on agriculture, 
the action was noteworthy as one of only a few private sector 
challenges the government of President Nestor Kirchner has 
faced.  End Summary. 
 
¶3. (U) Members of Argentina's largest farmer's association 
are concluding a four-day strike (July 22-25), during which 
they refused to sell or purchase cattle, grain, or other 
agricultural inputs and products.  The approximately 100,000 
members of Confederaciones Rurales Argentinas (CRA) were 
protesting GOA policies that they believe harm agriculture in 
Argentina.  Strikers showed remarkable unity during the 
country-wide strike, which spokespersons called an 
attention-getting measure that did not seek as an end higher 
prices for agricultural products.  Still, cattle prices are 
up by 13 percent over the past several days. 
 
¶4. (U) Agriculture has long been a sector that Argentine 
governments could take for granted -- a steady income 
producer with far less political clout than would be expected 
(Reftel A).  GOA actions over the past year, however, have 
pushed producers to protest.  Specifically, the GOA increased 
export taxes on beef and dairy products (before banning beef 
exports altogether for a time -- Reftel B); it has openly 
manipulated the wheat/flour market; and it eliminated export 
rebates that reimbursed a portion of the VAT tax paid by 
producers, somewhat offsetting the export taxes they had to 
pay.  Those measures have increased GOA revenues and kept 
prices relatively stable, both stated GOA goals, but at the 
price of producers' margins. 
 
¶5. (U) The GOA has acted to minimize any public relations or 
pricing effects of the strike.  For example, the number of 
cattle sold at the Liniers market, which sets the daily beef 
reference price, was considered by many as a bellwether for 
the strike's success: the fewer cattle available for sale, 
the more successful the action.  The GOA skewed that equation 
by encouraging producers to send extra cattle to the market 
on July 21, the day before the strike began, while at the 
same time using its coercive power to warn supermarkets and 
slaughterhouses from purchasing cattle that day.  As a 
result, only 15 percent of the 13,000 head entering the 
market sold on July 21.  On most market days that figure is 
closer to 100 percent.  That meant that thousands of animals 
were available for sale when the market reopened July 24, 
which allowed the GOA to downplay the strike's effects. 
 
¶6. (SBU) In another public relations move that producers 
derided as a largely empty gesture, the GOA announced that it 
would begin to implement its three-year old and heretofore 
moribund Cattle Development Plan.  The plan's details are 
unclear, but the GOA has said it will make available USD 280 
million to provide low interest rate loans and improve the 
genetic, sanitary, and nutritional resources available to 
small and medium-sized cattle operations. Producers 
contacted by the Embassy did not believe any such plan will 
incentivize further investment in an increasingly regulated 
sector. 
 
¶7. (SBU) Comment: The significance of this strike lies not in 
any immediate effect it might have on the prices of 
agricultural products, but in the fact that it is one of only 
a few private sector challenges this government has faced. 
Other such challenges, for example from supermarkets and 
downstream petroleum companies, have been quickly slapped 
down (Reftel C).  The CRA leadership seems unlikely to buckle 
so easily, and indeed will be meeting over the next few days 
 
to decide whether to extend the strike.  Any such extension 
would anger a GOA that has shown a clear and increasing 
desire to regulate the marketplace, and could set the stage 
for an interesting showdown.  End Comment. 
MATERA