VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #0408/01 0922156
ZNR UUUUU ZZH
R 012156Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0618
INFO RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000408 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
TREASURY FOR LTRAN AND MMALLOY 
E FOR THOMAS PIERCE 
PASS USTR FOR DUCKWORTH 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: EAGR ECON ENRG EPET AR
SUBJECT: ARGENTINE GOVERNMENT SEEKS TO SPLIT AGRICULTURAL SECTOR AND 
RALLY SUPPORTERS 
 
Ref: (A) Buenos Aires 00328; (B) Buenos Aires 00368; (C) Buenos 
 
Aires 00379; (D)Buenos Aires 00386; (C) Buenos Aires 0398 
 
------- 
Summary 
------- 
 
¶1. (SBU) President Cristina Fernandez de Kirchner (CFK) and her 
Economy Minister Martin Lousteau announced on March 31 a basket of 
agricultural concessions targeting small producers.  New measures 
include export tariff rebates, transportation subsidies, a 
re-opening of currently blocked wheat exports, subsidies for small 
dairy producers, and subsidized credit for small and medium 
producers.  These were clearly designed to erode solidarity within 
the sector by delinking the interests of large and small producers, 
but failed to address demands by the four major agricultural groups 
leading the sector strike against the GoA, who seek a wholesale 
roll-back of the sliding export taxes recently adopted.  The four 
agricultural entities announced that they will continue the strike 
until Wednesday, April 2, but will seek to limit current blockades, 
allowing dairy and other perishable products like fruits and 
vegetables to pass while blocking transit of grains, oilseeds, and 
meat.  On April 1, CFK gave a fiery address to 100,000-plus 
followers to rally political support.  Attention will now focus on 
the agricultural sector's response.  This sector is comprised by 
some  300,000 producers, of whom approximately 96% are small to 
medium-sized producers.  Although the four agrarian entities 
supporting the strike have historically represented disparate 
interests, they have found a common purpose in the current strike. 
It remains to be seen whether the GoA's efforts to divorce the 
interests of small producers from those of larger farming 
enterprises will succeed. END SUMMARY. 
 
CFK'S CONCILIATORY SPEECH... 
---------------------------- 
 
¶2. (U) President Kirchner and Minister of Economy Lousteau announced 
new measures March 31 in an attempt to appease the agricultural 
sector and bring an end to its 20-day strike.  The package did not 
alter the GOA's floating export tax scheme, whose elimination 
remains the principal demand of the four major Agrarian associations 
negotiating with the GoA.  GoA measures included tax compensations 
to medium and small producers that will leave them in the same 
financial situation as before the March 11 export tariff increase, 
transportation subsidies for the more remote provinces, a re-opening 
of currently blocked wheat exports, a subsidy for small dairy 
producers, subsidized credit for small and medium producers, and the 
creation of a new Sub-Secretariat for the development of small and 
medium producers in the Secretariat of Agriculture. 
 
¶3. (U) CFK struck a more conciliatory tone in her March 31 speech 
than she had the previous week.  CFK said that, as president, it was 
her job to look at the big picture and arbitrate among competing 
interests to decide what was best for the nation as a whole.  In 
measured, moderate tones, she refuted press claims that the soy tax 
had jumped to 44%, noting that rate was the ceiling of a sliding 
scale tied to soy prices (which are now declining sharply on 
international markets).  Even with the increased taxes, she claimed, 
soy farmers would earn 18% more than a year ago.  (Soy farmers 
contend the GOA calculation only contemplates revenues without 
accounting for rapidly increasing production costs.)  CFK did not 
justify the tax increases as revenue-generating measures, but rather 
as measures to hold down the price of food, to encourage crop 
diversification (the March 11 decree had increased taxes on soy & 
sunflowers but had lowered them on corn and wheat), and to foster 
income redistribution.  CFK noted that ten years ago, soy accounted 
for 30% of land under cultivation. It now accounts for 45%.  She 
claimed soy was much less labor intensive than other crops. 
 
¶4. (U) The four agricultural organizations leading the campaign 
against the government responded by announcing that they will 
continue the strike until Wednesday, April 2, at which time they 
will again meet to decide whether to prolong the protest.  They did 
decide, however that the strike should not affect dairy and other 
perishable products like fruits and vegetables, the supply of which 
has begun to falter in Argentine cities as a result of the lockout. 
In the face of the strike's continuation, the GoA has reportedly 
suspended exports of beef, raising the ante on this dispute. 
 
...AND HER TROOP-RALLYING ONE 
----------------------------- 
 
¶5.  (SBU) CFK spoke again about the strike on the evening of April 1 
to a huge (150,000, according to TV commentators) banner-waving 
crowd in historic Plaza de Mayo.  This speech was much more defiant 
and strident than her March 31 remarks.  She made no new 
announcements or promises, nor did she reiterate any of the 
arguments she made on March 31.  She opened by claiming her 
opponents were hounding her because she was (1) "guilty" of winning 
a majority of the votes in a free, democratic election, and (2) 
because she is a woman (later in her speech she returned to the 
gender issue).  "But I am proud of being both," she declared. 
 
¶6.  (U) CFK said Argentina over the last four and a half years had 
been enjoying unbroken economic growth, "unprecedented in the last 
hundred years.""  She asserted she had a mandate from the people to 
pursue a more just and equitable society, and that her tax policies 
were about "social inclusion" and income distribution.  She could 
not take on this task alone, and needed the people behind her.  She 
noted that the March 24, 1976 coup had been preceded a month earlier 
by a similar lockout (implying, once again, that the objective of 
the current farm strike is to destabilize her government).  She 
appealed several times to farmers to clear the roads.  The massive 
crowd dispersed immediately afterwards, as a heavy rainstorm bore 
down on Buenos Aires. 
 
---------------------------------- 
ARGENTINA'S DICHOTOMOUS PRODUCTION 
---------------------------------- 
 
¶7. (U) Argentina's agricultural sector is a highly diverse and 
efficient group of roughly 300,000 producers, ranging from 
small-holders to large producers in various segments of agricultural 
production (including beef cattle, dairy, grains and oilseeds, 
fruits and vegetables, sub-tropical crops, and many other minor 
crops).  Each segment has disparate interests, depending on its size 
and type of production. 
 
¶8. (SBU) The most recent official data showing a break out of the 
sector is from the Secretariat of Agriculture's Census of 
Agricultural in 2002.  Undoubtedly, there have been changes since 
then, and there is little consensus on current figures due to the 
difficulty in determining exactly what constitutes small producers 
vs. medium producers, etc.  This difficulty exists because scales of 
production efficiency vary widely across Argentina's agricultural 
regions.  Nevertheless, it is estimated that in Buenos Aires, Santa 
Fe, La Pampa, Entre Rios, and Cordoba -- which are the most 
important agricultural provinces with respect to grain and oilseeds 
production -- there are approximately 129,000 small- to medium-sized 
producers (producing on less than 2,500 hectares), which represent 
96 percent of farmers in those provinces.  Despite the government's 
rhetoric about "oligarchs" calling the shots in the Argentine 
countryside, it is estimated that there are only 15 producers in 
those provinces who farm more than 50,000 hectares.  Post estimates 
that approximately 10-15 percent of total grains and oilseeds 
production is produced by extremely large producers with more than 
50,000 hectares.  Although official government figures estimate that 
roughly 2,000 agricultural entities produce about 80 percent of the 
soybean crop, that figure is contested by local experts.  Post 
contacts at the Argentine Soybean Growers Association believe that 
there is much less concentration of production than what is stated 
by the government.  Approximately 70 percent of crop production in 
Argentina is carried out on rented lands. 
 
-------------------------- 
FOUR AGRICULTURAL ENTITIES 
-------------------------- 
 
¶9. (U) The following four entities are the most important local 
rural organizations which have been organizing support for the 
agricultural strike: 
 
-- Sociedad Rural Argentina (SRA):  Founded in 1866 by large cattle 
producers.  A large portion of its current 10,000 members include 
medium- to large-scale milk and crop producers.  Its president, 
Luciano Miguens, has generally been considered to be the most 
"flexible" of the four presidents in trying to reach agreements with 
the government.  However, during this crisis, he has continued to 
 
 
support demands that the GoA suspend the recent increase in export 
taxes. 
 
-- Confederaciones Rurales Argentinas (CRA):  Founded in 1943, it 
currently has 110,000 members of all sizes involved in the gamut of 
agricultural activities.  They are distributed in 310 groups which 
form 13 confederations.  Mario Llambias, the current president, is 
considered one of the most "combative" of the presidents of the four 
agrarian groups.  CRA also demands suspension of the recent export 
tariff increases. 
 
-- Confederacion Intercooperativa Agropecuaria (Coninagro):  Founded 
in 1953, it includes more than 100,000 members and 500 local 
agricultural cooperatives which market approximately 20 percent of 
the country's total crop production.  Coninagro also includes 
producers of secondary agricultural products, including rice, 
cotton, tobacco, and tea.  Fernando Gioino, its current president, 
is considered a moderate negotiator.  Coninagro is interested in 
expediting a resolution favorable to small- and medium-sized 
producers of crops, beef and dairy products. 
 
-- Federacion Agraria Argentina (FAA):  Founded in 1912, it has over 
100,000 members and represents small and medium producers throughout 
the country.  Eduardo Buzzi, its current president, is considered 
aggressively combative.  Until 2006, he maintained a close 
relationship with the GoA, but since that time, FAA has been one of 
the most outspoken of the four agrarian groups.  FAA demands the 
suspension of recent export tariff increases (at least for small and 
medium producers) and wants to expand dialogue with the GoA to 
resolve pending issues concerning dairy, beef, wheat, and other 
agricultural activities. 
 
¶10. (U) Historically, these four entities have had disparate 
interests and have seldom come together as a single political voice 
for the agricultural sector as a whole.  Despite growing discontent 
by the entire agricultural sector in recent years, there has been no 
single event that persuaded different segments of producers to 
overlook their particular group's short-term interests in favor of 
making a united front against government intervention in the sector 
- until now. 
 
¶11. (U) As a result of the recent crisis, these four groups have 
formed the "Comision de Enlace de Entidades Agropecuarias" (Rural 
Organizations Liaison Commission) which is demanding: cancellation 
of the recent sliding export tax regime; a long-term GoA commitment 
to increase domestic cattle production; a freeing of the export 
controls for high value beef cuts that are not of high domestic 
demand; a reduction of export taxes on dairy; normalization of the 
wheat market with full prices (before deduction of export taxes) 
paid to producers; and to more clearly differentiate and define 
small and medium producers from the large pools of production. 
 
¶12. (U) In addition to the four groups above, a new agricultural 
voice has emerged out of this crisis which is being referred to as 
"Self-Convoked Participants" (autoconvocados).  They are not members 
of the traditional organizations mentioned above, but rather are 
mainly producers, families, traders, students, and others who are 
directly impacted by lower rural profitability.  Most of them are 
protesting on the highways and in towns of the most important crop 
producing provinces (Buenos Aires, Santa Fe, Cordoba, Entre Rios, 
Chaco and Santiago del Estero), but have also been represented in 
large cities like Buenos Aires, Rosario and Cordoba. "Self-Convoked 
Participants" make decisions based on their own judgment and 
situation, but do listen to what the Rural Organizations Commission 
has to say. 
 
--------- 
COMMENTS 
--------- 
 
¶13. (SBU) The agricultural sector was instrumental in helping 
Argentina emerge from its 2001/02 financial crisis.  Initially, the 
sector accepted the GoA's "redistribution" of its rural income via 
export taxes resurrected "temporarily" in 2002 as necessary to help 
the country regain its economic footing.  However, after five years 
of strong GDP growth, the agricultural sector feels 
disproportionately burdened by a combination of restrictions and 
outright bans on beef, dairy, and some grains (to keep domestic 
consumer prices in check) and by successive increases in export 
 
 
taxes.  The Kirchners' roots are in the Peronist movement, 
historically considered to be hostile to the agricultural sector and 
obsessed with  Argentina's industrialization.  The simmering 
antagonism of the agricultural sector occasionally flares up, as it 
did in August when Agriculture Secretary Urquiza stormed out of the 
opening session of the country's biggest agricultural fair after SRA 
President Migens publicly criticized GoA agricultural policy and 
spectators unveiled critical posters.  The recent change in tax 
policy announced on March 12 was the "last straw" for the sector, 
generating the first sector-wide front against the Kirchner 
government's intervention. 
 
¶14. (SBU) The Argentine agricultural community has evolved 
considerably over the past fifteen years, and technology has played 
a major role in that change.  While producers have historically been 
autonomously scattered across the country, facilitating their 
exploitation by the central government, satellite TV, cellular 
telephones, and the Internet have brought producers together as 
never before.  New communications technology have allowed agrarian 
producers to better coordinate their actions and respond in real 
time to the recent policy decision in a way that has to date 
frustrated GoA attempts to undermine the strike.  The Kirchner 
administration's current efforts to break solidarity between the 
various segments in the agricultural sector (namely, small vs. large 
producers) has met a new-found solidarity never before encountered. 
Despite the ongoing strike and uncertain outcome, the agricultural 
sector as a whole has gained a political voice that marks the limit 
of the Kirchner administration's ability to extract resources from 
the sector to finance its agenda. END COMMENT. 
 
WAYNE