MercoPress. South Atlantic News Agency

Mrs. Kirchner cancels export tax; farmers' conflict “is over”

President Cristina Fernandez de Kirchner administration canceled the widely protested farm export tax hike on Friday following four long months of protest and a stunning rejection by the Senate. First reactions from farmers was that the “conflict is over”.

Cabinet Minister Alberto Fernandez told reporters at a news conference that the government will comply with a Senate vote on Thursday rejecting the tax package. The Senate vote itself was not enough to cancel the tax hike because it has been issued by executive order. The president announced the sliding-scale export taxes on grains and oilseeds in March arguing it was geared to distribute windfall profits from soaring international commodities prices and to ensure affordable food prices for Argentine consumers. But farmers reacted saying they were "unconstitutional and confiscatory", staging a series of food and transport strikes that disrupted the economy and eroded the president's popularity. Farm leaders welcomed cancellation of tax hike. "The conflict is over," said Luciano Miguens, head of the Argentina's Rural Society, to a local television station C5N. Wednesday's early morning Senate vote against the tax increase created divisions in Mrs. Kirchner ruling Peronist party and her broader coalition, which comfortably controls both chambers of Congress. On the news Argentine stocks and bonds rallied with the MerVal benchmark stock index rising 0.72% after falling in early trading. Trade volume was a modest 39 million US dollars. Among active issues, 75 rose, 28 fell and 18 unchanged. Meantime Argentine bonds traded on the local market also rose following the announcement bouncing back from losses earlier in the session and gaining about 1.3% on average in over-the-counter trade. On the foreign exchange market, the peso closed unchanged amid heavy intervention from the central bank, traders said. In Chicago soy and corn yielded on news of the Argentine government decision to revoke the controversial Resolution 125.