Dramatic: farm-govt clash gets out of control

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Argentine farmers angry over higher export taxes will go on strike for the third time in two months, farm leaders announced on Tuesday, deepening a conflict that has dented the popularity of President Cristina Fernandez.

Farmers will halt grains sales beginning on Wednesday until June 2 to protest a government-imposed sliding-scale tax system for exports that farmers say caps prices on their goods.

Farmers' decision to go back on strike reflects heightening tensions in a prolonged conflict that is the most serious political test for Fernandez since she took office five months ago.

Argentina is one of the world's leading exporters of soy, wheat and corn, and soy prices on global markets have risen in recent weeks as on-again, off-again talks failed to resolve the standoff.

"We are tired of repeating and showing our willingness to dialogue," said Mario Llambias, president of the CRA agricultural association, one of the country's main farm groups.

The resumption of the strike, during which farmers will also halt beef sales as of Thursday, came a day after government called off negotiations following a weekend rally by farmers which drew 200,000 people critical of the country's agricultural policies.

Sunday's rally was the biggest anti-government protest against Fernandez or her predecessor and husband Nestor Kirchner, who was president from 2003 to 2007.

Ahead of the announcement of the strike, leaders of the ruling Peronist party headed by Kirchner issued a statement accusing the farmers of seeking to destabilize government.

Farmers are calling for the sliding-scale tax system to be repealed. But President Fernandez defends the tax hike on farm goods as a way to redistribute wealth and combat inflation in a country where a quarter of the population lives in poverty.

Increased revenue from export taxes has helped government maintain healthy budget surpluses and solid fiscal accounts.
Argentina's economy has grown more than 8 percent a year over the last five years.

The tax system raises levies on exports to international prices, raising taxes on soy exports for example from 35 percent to 40 percent at current prices.

An opinion poll published last week by the Poliarquia consulting group showed 26 percent of Argentines had a positive image of Fernandez, down from 47 percent when farmers launched their first strike in mid-March.

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