MercoPress. South Atlantic News Agency

Uruguayan farmers demand fewer taxes and less Mercosur commitments

Manuel Lussich warned about surging government spending

Uruguay’s main agriculture show ended Sunday with a record number of visitors and harsh criticisms for the government: Farmers complained bitterly about the ballooning fiscal expenditure, taxes and demanded a broadening of horizons beyond Mercosur.

The Uruguayan Rural Association, ARU, at the closing ceremony of Expo-Prado 2009 which extended for two weeks in Montevideo, said that besides the international crisis farmers in the last twelve months had to endure one of the worst droughts to hit the region, and at the start “the government denied the fact” and went on to describe them as “improvised” for not having prepared for such a phenomenon.

Agriculture and Livestock Minister Ernesto Agazzi responded to criticisms with statistics on achievements of the last five years and the economic turn around with windfall earnings for virtually all agriculture commodities in recent years.

“In spite of the drought the government continued to collect income taxes advances and other levies as if nothing had happened or was happening”, said Manuel Lussich, president of ARU, the main speaker at the closing ceremony.

Lussich said that at the end the government admitted the terrible drought situation and implemented an emergency plan for small farmers, which was limited in resources and the number of farms covered, “but it was an admission, and must be acknowledged”.

Further on he warned that the milk industry was going through a dramatic situation “with many dairy farms sending production cows to the abattoirs simply because the price of milk is insufficient to cover costs”. He added that the price crisis has worsened considerably with “Mercosur protectionist outbursts”.

Lussich also complained about unexpected changes in indirect tax reimbursements which are harming particularly “wheat export contracts, when deals had been agreed and the sowing of crops had started”.

ARU warned that the new international context “with moderate relative prices demands from government not only caution in outlays, but a very precise targeting in what to spend”. Lussich said that “government spending in the first half of this year was 6% higher in real terms than in 2008, precisely when the peak of the crisis”.

“Since 2005 (when the catch-all coalition Broad Front took office) government spending has ballooned 80%, we beg moderation and prudence”, the evolution of economic events is cyclical and the job of the government is to be prepared for the rough times.

Finally Lussich asked all presidential hopefuls for next month’s election to be more opened minded, and ensure Uruguay with “an improved overseas insertion” (beyond Mercosur) and insisted that it was crucial to complete a free trade agreement with United States.