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Argentine farmers pray for winds of change
Reuters
June 22, 2009

By Helen Popper

NAVARRO, Argentina (Reuters) - It's wheat sowing season on Argentina's Pampas plains, but farmers are biding their time -- praying for rain and a government defeat in Sunday's mid-term election.

Months of tax protests by farmers last year sparked broader discontent with center-left President Cristina Fernandez, who faces the biggest test of her turbulent 18 months in office in the vote and risks losing her congressional majority.

Argentina, once dubbed the world's breadbasket, remains a leading global food supplier, but growers like Jorge Cerda in the small town of Navarro say political uncertainty means they're keeping investments in machinery, seeds and fertilizer to a minimum.

"If I end up with a little spare cash, I'll put it anywhere but in investing, and that means less work for the people of Navarro," Cerda said at the local branch of the Argentine Rural Society, one of the groups that led the anti-government protests over soy export taxes.

"It's difficult with all the uncertainty, and people aren't planning for the future," dairy farmer Eduardo Caruso said, adding that one of the worst droughts in decades had further darkened the already gloomy mood in the countryside.

"Right now we've got the perfect storm," he said.

Navarro is known as a dairy farming town, but here and elsewhere across the Pampas more lucrative soy crops are tempting many smaller-scale ranchers to rent out their fields and sell their herds.

Many farmers blame government policy for forcing them to give up their traditions.

SOY TAX IS LAST STRAW

Ranchers have been complaining for years about government efforts to tame rising milk and beef prices for steak-loving Argentines by curbing exports and capping prices, but Fernandez's attempt to hike soy taxes was the last straw.

It galvanized farmers' anger and several protest leaders are running for Congress on Sunday in a bid to challenge Fernandez's farm policies and push for lower taxes on multibillion-dollar grains shipments.

Fernandez defends the high export taxes, which are a major source of state revenue, as a way to redistribute wealth among poor Argentines.

Polls suggest the president's allies will lose control of Congress, making it easier for the opposition to push proposals to reform soy taxes and harder for her to pursue her policies to increase state control in the economy.

However, Fernandez and her husband and predecessor, Nestor Kirchner, are expected to win a significant number of seats from the most populous province, Buenos Aires, where they have firm support in the poor, scruffy suburbs that circle the capital.

In Navarro, about 75 miles from Buenos Aires, farmers hope Sunday's result will be a portent of change in the next presidential election in two years.

"We'll have to wait until 2011, but this is a first punch and a first step for people to get involved," said Ignacio Bastanchuri, president of the Navarro rural society branch.

Argentina has been a top-five wheat exporter in recent years, and is neighboring Brazil's main supplier, but parched soils and tight profit margins are expected to cause the sowing area to shrink to its smallest size since records began.

Navarro farmers still have until July, but even if they do decide to plant wheat, production may be further hit by lower spending on fertilizers and other agrochemicals.

"If the weather improves a bit, people are going to sow, but they're going to cut costs," said Rodolfo Bonnin, who runs a small ranch with his wife, Estela Natalini. They dedicate part of their land to crops to make up for losses from the cattle.

Natalini, whose family has reared cattle near Navarro for three generations, said times have never been harder.

"I'm producing food, but we get no help at all," she said in her modest farm house kitchen. "It's very upsetting."

(Editing by Walter Bagley)

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