Argentina modifies hated export taxes

President Cristina Fernandez's government hiked export taxes on select grains in March, unleashing weeks of strikes that triggered food shortages. Farmers suspended the strike for talks, but on Wednesday they once again blocked grain exports and relaunched road blockades.

In a bid to ease the standoff Thursday, the government announced that it would set a ceiling on variable export taxes for soy, sunflower, corn and wheat on the futures market.

"I hope this addresses the worries of the farm leaders," Cabinet Chief Alberto Fernandez said.

But the adjustment does not roll export taxes back to their original levels as the country's four leading farm groups have demanded during their three-month conflict with the government.

"The news is not good," Luciano Miguens, head of the Rural Society group, told local television reporters. "We'll have to study it in detail, but it looks like just more of the same."

Soy exports have been at the center of the dispute. According to the government's adjustments, if international soy prices were to reach US$750 per metric ton, the export tax ceiling would be about 52 percent--down from nearly 58 percent, Economy Minister Carlos Fernandez told a news conference.

Amid a worldwide commodities boom, 1 metric ton of soy costs a bit less than US$500, on which Argentine farmers pay a 40 percent export tax. The export taxes are on a sliding scale, fluctuating depending on international market prices.

Fernandez says the export taxes are needed to redistribute money to the poor and to keep farmers producing wheat, corn and cattle for the local market instead of trying to capitalize on soaring world prices for soy.

Farmers, on the other hand, maintain they need the profit to invest in technology and equipment, which they say are needed to boost production to meet high worldwide soy demand.

Argentina is the world's third largest exporter of soy beans.