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Argentine farmers halt grain, beef sales

BUENOS AIRES, Argentina (AP)--Argentine farmers will halt grain and beef sales late March 20, declaring a seven-day strike against a new government plan to funnel soy export taxes into an emergency fund destined for the nation's provinces.

Sales will be suspended through March 27, Argentine Rural Confederation head Mario Llambias said, potentially slowing exports and tightening domestic food supply in the second such strike this year.

Farmers have asked the government to reduce taxes on soy and other grain exports, now as high as 35 percent, for more than a year, saying the levies make their goods less competitive abroad just as the global economic crisis slashes demand for commodities.

Weeks of renewed negotiations led the government to cut wheat and corn export taxes by five percentage points last month. But the move failed to assuage farmers, who insist that further cuts reduce taxes on soy, Llambias said.

Farmers are also protesting what they call the government's slow and insufficient response to an ongoing drought, one of Argentina's worst in a generation.

President Cristina Fernandez defends the soy tax, and on March 19 announced plans to funnel $1.8 billion a year, or 30 percent of soy export tax income, into an emergency fund to finance infrastructure projects in the nation's 23 provinces, easing the impact of the world economic slowdown.

Farm leaders accused the president of trying to buy support from provincial governors and weaken national sympathy for farmers ahead of an expected June 28 election.

While the fund will divert public income and slash the federal budget surplus, it will also ease "growing fiscal distress at the provincial level," said Alberto Ramos, a senior economist at Goldman Sachs in New York. He called Fernandez's move "politically shrewd."

"Voters will now be less keen to support the demand for lower export taxes, and they will benefit from higher infrastructure spending," Ramos wrote in a note to investors on March 20.

Opposition lawmakers had sought to submit a measure to cut export taxes on March 19, but members of Fernandez's party skipped the debate, precluding the needed quorum.

Hundreds of farmers joined roadside protests on March 19 and 20, resuming positions they held through four months of strikes last year that paralyzed the country's rural economy.

Argentina is among the world's top exporters of soy, corn, wheat and beef.

The government did not immediately respond to news of the strike. It has insisted that soy levies are necessary to better distribute wealth among Argentina's 40 million citizens.

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