Argentina-Farmers and Politicians.

ARGENTINA-THE LULL AFTER THE STORM.

Although Argentine farm leaders reached a tension-easing deal with the government Tuesday, the rank and file in the fields are still angry.

You are never going to see a satisfied farmer or a dead donkey, for both are extremely rare.

Equally compromise is alien to most politicians in Argentina who are selected from the 5% elite, that had the opportunity of an education to become a politician in the first place.

That means that a return to last year’s bruising conflict remains a real possibility. As the Champagne socialists and the wealthy farmers are really fighting for political power rather than any agricultural issues.

The partial agreement came after President Cristina Fernandez dropped in

unannounced on the meeting between farm leaders and Production Minister Debora

Giorgi on Tuesday. Concessions made over meat, wheat and dairy - in addition

the president’s conciliatory gesture - convinced farm leaders to sign the

accord.

"We hope this ends the conflict," Interior Minister Florencio Randazzo said

at a press conference following the meeting.

The President came out on Wednesday, the morning after the crucial deal was signed and said that it fell far behind any real solution to the current problems.

However, the farm leaders aren’t so sure. They continue to complain about

restrictions and taxes on exports as well as the widespread damage suffered due

to drought this season.

"The conflict is by no means resolved," Eduardo Buzzi, president of the

Argentine Agrarian Federation, or FAA, told reporters.

The agreement centered on providing farmers a minimum price for their wheat,

loosening wheat export controls, and increasing subsidies and export quotas on

beef and dairy products.

The government said it won’t budge on the farmers’ central demand for a

reduction in agricultural export duties, which run as high as 35% on the

country’s top crop, soybeans.

A third meeting between the farmers and government officials is scheduled for

Tuesday and many farm group members want their leaders to continue to press the

government hard.

Some farmers were enraged that their leaders signed the deal without

consulting the membership.

"As [the deal] is right now, it’s useless," said an official at the Buenos

Aires and La Pampa Province Rural Association, or CARBAP. The group has

traditionally been one of the most combative and is represented in the talks

with the government by the Argentine Rural Confederation, or CRA.

CARBAP has called an emergency meeting Friday to debate the agreement and

consider further protest measures.

The new deal is lacking in specifics, will take months to implement and

doesn’t address the core complaints of farmers, the CARBAP official said.

There are also important fissures growing between the national and local

units of the influential FAA, which traditionally represents small-scale

farmers.

Entre Rios province FAA leader Alfredo de Angeli was quick to criticize the

signing of the agreement. "They’re just promises, and there’s still many

important issues to be resolved," de Angeli told local radio.

FAA president Buzzi, reacted angrily to the complaints.

"It’s really easy to criticize from far away," Buzzi told reporters. "I’m

really sick and tired of the attitude and posturing."

De Angeli rose to prominence during a series of strikes and roadblocks over a

four-month period last year. He became a national face for the farmers as

Argentines tuned in to hear rousing, televised speeches he made from a flatbed

truck where he roundly slammed government policies.

The progress made Tuesday provided some relief to Argentines fearful of a

repeat of last year’s crippling strikes, but nobody is quite sure if the truce

will hold.

The deal is "broadly supportive for credit and foreign exchange markets" but

there are "still a lot of open questions that may miscarry the negotiation,"

Barclays Capital Research said Wednesday.

The situation should become clearer in the coming days, but there is a chance

that this may simply be a chapter in a repeat of last year’s saga, Barclays

said.

Goldman Sachs analyst Alberto Ramos said in a market note that the deal

showed a new willingness by the government to take a less confrontational

stance.

The fight with farmers last year led to a steep decline in the president’s

approval rating, which has hovered at about 30% since the conflict. The

lingering strife also led some legislators to defect from the president’s

Victory Front coalition. Fernandez has watched a majority in the House of

Representatives slip away and the comfortable majority enjoyed in the Senate

has narrowed.

"The political and economic lessons learned from last year’s bruising battle

with the farmers and this year’s much weaker state of the economy should lead

to less disruptive events and a more compromising government stance this time

around," Ramos said. "On the other hand, the effects of the drought and lower

commodity prices will certainly strengthen the resolve and the demands

presented by the farmers."

Farmers’ frustration has built over the past year as international grain

prices have fallen sharply, a brutal drought decimated crops and the government

tightened its control over exports and local markets to shield consumers from

rising food costs.