BUENOS AIRES—Argentine President Cristina Fernandez Tuesday refused to budge on a tax hike on grains exports, as farmers protesting the measure vowed to extend a two-week strike amid signs of food shortages.
Protesters have blocked roads and paralyzed grain markets for nearly two weeks in the biggest conflict to face Fernandez since she took office in December. Signs of food shortages have increased pressure on both sides to resolve the dispute.
Hours after farmers vowed to continue the protest for "as long as necessary," Fernandez said the agricultural industry was one of the country's most profitable and defended her government's farming policies.
"I'm not going to submit to extortion. I understand the industry's interests, but I want them to know that I'm the president for all Argentines," she said in a speech, her first public comment on the strike.
Soon after she spoke, hundreds of Buenos Aires residents banged pots and pans on street corners and in front of the presidential palace in support of the farmers.
In the northern city of Tucuman, a sugar- and citrus-growing region, strike supporters crowded a downtown plaza, local television showed.
Trade at the biggest grain and cattle markets has ground to a halt since the strike began on March 13, while stores have reported diminishing supplies of beef and some dairy products.
Farmers have blocked roads across the country with tractors and grains shipments have been hit. Argentina is one of the world's leading suppliers of soy, corn, wheat and beef.
Strike leaders said the protest would continue until the government shelves the new export tax regime, which introduces a sliding scale of duties and substantially raises levies on soy and sunflower sales.
Agricultural leaders had agreed to "continue this strike for as long as necessary," Eduardo Buzzi, president of the FAA association, told a news conference.
Escalation
The strike marks a sharp escalation in a three-year-old dispute between the government and the farming lobby, which has been angered by policies aimed at controlling inflation that have included export bans and price controls.
Grains exports have been hit by the indefinite protest.
"At the moment, the majority (of grains exporters) are not operating. Because we've ended up with no stock. No grains, no oils and no meal," said Alberto Rodriguez, director of the Cereal Exporters Center (CEC) and vegetable oil group CIARA.
Some exporters declared force majeure last week, switching soy shipments to the United States, U.S. traders said.
Meanwhile, consumer and retail groups said reports of bare shelves at grocery stores were increasing as the strike dragged on. The protest has also weakened the peso currency due to fewer inflows of dollars from farm exports.
But road blockades have become the most visible aspect of the protest. The demonstrators have been letting trucks pass as long as they are not carrying farm goods, but frustrated truck drivers began clearing barricades themselves in some places.
Farmers at roadblocks handed out pamphlets, saying hefty export taxes "take (money) from rural communities, from our shop owners and our industries. With this money there could be more investment, more jobs and a better future for everyone."
Government officials have sent some signals of trying to end the crisis, announcing price cap agreements on fertilizers and proposing a special agency to deal with issues faced by small farmers. But those proposals have not been enough for farmers, who say the export tax hike was the last straw.
The government has used levies on grain exports to boost state revenue at a time of exceptionally high commodities prices, and to curb high local inflation.
Economy Minister Martin Lousteau said government policy, such as maintaining the peso weak, had helped the sector.
"(The farmers) don't say a single word about the things ... that benefit them," he told local radio.
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