Business

Mon Jun 16 21:33:33 PDT 2008

(Adds comments by government ally and farm leader, paragraphs 6-8, 15, 16)

By Helen Popper

BUENOS AIRES, June 16 (Reuters) – Pro-government groups are planning a mass rally to show support for Argentine President Cristina Fernandez, whose popularity has been eroded by a three-month conflict with farmers, organizers said on Monday.

Despite a national holiday, farmers kept up roadside protests in rural areas to stop trucks carrying grains from reaching port where boats are waiting to be loaded as the dispute over export taxes drags on.

Violence flared at a highway blockade near the town of Gualeguaychu on Saturday after military police used batons to clear the road, arresting a prominent farm leader.

The unrest led farmers to announce a fresh freeze on grains sales until Wednesday, when the pro-government rally in front of the presidential palace could further stoke tensions. Farm leaders have vowed to stage "a day of protest" the same day.

"We’re going to pack the Plaza de Mayo to defend the government of President Cristina Fernandez," the organizers said in a statement, referring to a main square in the capital.

Controversial government ally and former official Luis D’Elia later accused the farmers and political rivals of Fernandez of seeking to destabilize the administration by weakening the economy.

"We’re witnessing an economic coup attempt," D’Elia, who has been involved in several scuffles during the conflict, told a news conference.

Fernandez, who took office six months ago, also has likened the farmers to coup leaders, invoking memories of decades of political instability in the South American nation.

COLLISION COURSE

Argentina accounts for nearly 3 percent of total food exports and its vast, fertile Pampas plains make it a leading producer of soy, corn, wheat and beef.

The strike has pushed up global soy prices and has rattled Argentine financial markets, casting a cloud over the country’s recovery from an economic and political crisis in 2001-02.

Latin America’s No. 3 economy has roared for six years, partly due to huge Asian and European demand for soy, which accounted for nearly a quarter of export earnings last year.

However, the bounty has set farmers on a collision course with Fernandez, who has her support base in poor urban areas.

One of her government’s toughest challenges is fighting inflation, which is hitting poor Argentines the hardest, and she defends high export taxes and limits of foreign sales of farm goods as a way to battle rising food prices.

The wave of strikes and roadblocks started in mid-March after she imposed another hike on soy export taxes. She said it would help redistribute wealth, but it was the last straw for farmers.

Farm leaders said on Monday they did not want to fuel the confrontation.

"The government has to understand that we’re asking for a signal from the president … as soon as there’s a positive signal we’ll lift the strike," Luciano Miguens, president of the Argentine Rural Society, told reporters.

Political analysts saw no quick resolution to the dispute, which has dented Fernandez’s approval ratings.

(With additional reporting by Cesar Illiano; Editing by David Gregorio)

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