Argentina: Rural lockout challenges government

April 19, 2008

The government of Argentinean President Cristina Fernandez de Kirchner had the first of a series of meetings on April 15 with the leaders of the agricultural sector.

The meeting sought to discuss the implementation of a revised taxation package, which the government announced during the rural lockout that had lasted for 21 days. It began after the government introduced tax increases from 35% to 45%, in most cases, on agricultural exports such as wheat, soybeans, and beef.

The proposed package will rollback the tax increases, with compensation for small-to-middle agricultural producers.


The economic policies of Kirchner's government, as well as previous administrations, have included large subsidies for the agricultural sector.

This has lead to a concentration of capital in the production of primary commodities — soybeans in particular since the '90s, which now accounts for 22% of the GDP.

The powerful landowning capitalists, and the foreign transnationals that benefit from agricultural production, have reaped super-profits from the rising prices of agricultural commodities. In the last year the price of soybeans has risen by 70%.

On March 28, Clarin reported: "It was in the first quarter when there was a registered rise of 30% of prices in the products that Argentina sells to the world."

With the dependence of the Argentine economy on agriculture, the large agricultural producers continue to strengthen their power. "There is 2.2% who own 46% of production", reported Pagina 12 on April 1.

Small producers make up 80% of the rural population, but only produce 20% of soy beans. There are more than 300,000 workers in the agricultural industry, with a miserable average monthly wage of US$379.

The government claims the fiscal measures introduced are an attempt to keep basic food prices low by encouraging production towards the internal market rather than exports, and to stimulate economic development in broader sectors, as well as avoiding over-reliance on single crops.

The government also argued its measures are a way to mitigate the impact of the international financial crisis and to redistribute the country's wealth.

However, the economic model that the government supports ensures that the agricultural oligarchy has a dominant position in the economy. The inflation of primary commodities is, a direct result of the government's economic policies.

Instead, the fiscal measures are an attempt to redirect money to pay off Argentina's existing foreign debt to the International Monetary Fund.

@question = Right-wing response

The Kirchner government generalised the taxation increase — applying it to the entire agricultural sector, without differentiating between the size of the producers. This allowed the right-wing forces to unite all four agricultural organisations under the leadership and program of large agri-business.

Sections of Argentina's capitalist class mobilised the media, opposition groups and the middle-class, seeking to use the rural strike to weaken the government.

The majority of those blockading the roads were small-to-middle producers, under the leadership of the agricultural capitalists. In the cities the protests involved the upper-middle class, in solidarity with the rural strike. The initially vehement protests began to fade once food shortages become palpable.

The coverage in the mass media was aimed at helping generate public discontent. By the end of March, local supermarkets were out of meat.

Government responds

While initially unwilling to budge on the tax increase, the Kirchner government eventually compromised. The revised tax increase would see a differentiation between producers based on size, rolling back taxes on small-to-middle producers.

However, the Agrarian Federation, which represents small-to-middle producers, followed the lead of the other organisations and rejected the government's offer as "inadequate". Instead, they declared that the lockout would continue until April 2.

The Kirchner government mobilised 100,000 people on April 1 in Buenos Aires in a show of force. It waged a demagogic campaign, drawing comparisons with events that led up to the 1976 military coup. Kirchner spoke to the crowd of "the defence of the national and popular government", making references to Evita Peron, and Las Madres de la Plaza de Mayo — the famous movement of mothers whose children disappeared during the military dictatorship in the '70s and '80s who had family members disappeared during the dictatorship.

The following day, the lockout was suspended for 30 days, with the government and agricultural organisations still in dialogue.

Positions on the left

The confrontation between the government and the ruralistas saw a range of responses and differences among the Argentinean left.

Firstly, there were small layers, such as the debilitated Communist Party and other pseudo-left organisations with government positions, which defended the government unconditionally and mobilised for the April 1 demonstration.

Another left block, including the Workers' Party (PO) saw the situation as a battle in between two wings of the bourgeoisie — "capitalism versus capitalism" — arguing it was necessary to have a strategy independent of both sides of the battle, rallying behind the slogan "Not the countryside, not the government."

A PO statement argued that "it's necessary to deal with a systemic crisis, not the rate of a tax."

Other left forces rallied behind the slogan "against Cristina, and against the oligarchy. Support for the small producer!" This layer, such as the Socialist Workers Movement-New Left (MST), argued that it was necessary to win over the small producers. It campaigned for the rollback of the tax increases, and criticised the government for not assisting the small producer.

According to the April 9 Pagina 12, MST leader Vilma Ripoll commented that "this crisis has demonstrated that the stage that opened in Argentina since [the] 2001 [economic collapse] is not closed. Cristina has confirmed this reality, which for her and her government left a sour taste."

[Gonzalo Villanueva maintains the blog,]

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