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Argentina does not rule out grain market intervention
Tue Mar 3, 2009 8:10pm EST
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By Hugh Bronstein
BUENOS AIRES (Reuters) - Argentina may create a state-controlled agency to influence prices in the country's powerful grains market, but any proposal will be put before Congress and not enacted by decree, an official said on Tuesday.
Farmers had threatened to strike over the idea of intervention in the soy, wheat and corn markets. But they emerged from a meeting with left-leaning President Cristina Fernandez and called the talks over farm policy "positive."
Interior Minister Florencio Randazzo said the government would seek approval from lawmakers for any plan to increase the state's role in the agricultural sector.
Officials, speaking off the record in recent days, had suggested that Fernandez might create the body by decree.
"We are not going to send a proposal today, but we do not discount the possibility in the future," Randazzo told reporters after a two-hour meeting between Fernandez and farmers aimed at defusing a long-running political battle over export taxes and other government policies.
"The creation of any agency for state intervention in the grains trade would protect small and medium-sized producers and, above all, involve Congress," Randazzo said.
Agricultural leaders told reporters the discussion had yielded "some positive results", signaling a reduction in tension after months of political battle between the farm sector and Fernandez's administration.
Also on Tuesday the government and farmers agreed on a minimum price for domestic wheat sales and struck a deal to increase the amount of beef that can be exported. The two sides also agreed to increase subsidies for milk producers.
Argentina is the world's No. 3 exporter of soybeans and the top supplier of soyoil and soymeal. It is also the No. 2 corn exporter and a leading supplier of wheat and beef.
Farm groups protested for months last year over a short-lived rise in export levies. The demonstrations cut into grains exports and prompted a political crisis before the tax hike was repealed by Congress.
Producers say more tax cuts are needed to offset lower global commodity prices brought on by the world financial mess and the effect of a severe drought earlier this season. The government refused again on Tuesday to reduce levies on the country's top export, soy.
Uncertainty over Argentine exports buoyed Chicago Board of Trade soybean prices on Tuesday.
Farmers initially denounced the idea of state intervention as a desperate bid by Fernandez to shore up dwindling government finances by grabbing control of the grains and cattle markets.
STATE INTERVENTIONS
Fernandez and her allies in Congress nationalized Argentina's private pension funds in 2008, as well as the country's main airline. On Sunday, she told Congress more interventions were on the way in order to protect Latin America's third-biggest economy from the global slowdown. Continued...
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