Argentine growers face crippling tax hikes

BUENOS AIRES, March 29 (UPI) -- Argentine President Cristina Fernandez de Kirchner is headed for another confrontation with farmers after the government announced hefty increases in taxes on grain exporters.

Leading grain exporters said they received demands for large tax payments with government warnings they wouldn't receive rebates interest payment rates.

The tax demands came amid agriculture industry estimates the total tax recovery amount could top $951 million. Farmers' representatives warned of potential conflict between farmers and government agencies.

Argentina is a major exporter of grains and oilseeds but is recovering from severe drought as well as disputes over prices and farmers' incentives.

The government has a tense relationship with the farmer communities after frequent clashes centered on farmers' demands they don't receive appropriate incentives as do farmers in neighboring countries.

Instead, farmers' representatives say, the agriculture sector is burdened by heavy taxation.

Violent clashes between farmers and police and other government law enforcement agencies are an annual occurrence.

Officials indicated the government might relieve some of the tax burden on selected farmers' communities and reduce interest rates on late tax payments to 1.35 percent from 2 percent.

Faced with frequent protests officials say late payments can be made in as many as 120 monthly installments.

However, the officials warned, grain growers might not be included in the deal because of alleged malpractices.

The tax recovery campaign has targeted major grain exporters including Cargill, which faces a $228 million tax demand; followed by Bunge, $126.3 million; Molinos Rio de la Plata, $197 million; Louis Dreyfus Corp., $141 million; Nidera S.A., $132 million; Vicentin SAIC, $62 million; Aceitera General Deheza S.A., $48 million; and Oleaginosa Moreno Hermanos Sacifia, $17 million.

Independent data on the dispute have been hard to come by.

Farmers are also in dispute with the government on terms for releasing their soybean stock for export. The Buenos Aires Herald cited farmers' angry response to reports the government was planning to confiscate soybean stocks.

The head of Entre Rios Agrarian Federation, Alfredo De Angeli, warned the government "could trigger a big conflict" if it forced the growers to sell their harvests. The Herald said "rumors" suggest the government could invoke the anti-terrorism law to force farmers to sell their harvest.

Officials are "convinced" the soybean producers are holding back stocks worth $3 billion-$5 billion in potential foreign exchange earnings, the Herald said.

Argentine Rural Society President Luis Miguel Etchevehere said invoking the anti-terrorism law against farmers would be "fascist." Other critics said the measure would be reminiscent of Stalinist oppression in the former Soviet Union.