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A standoff between Argentine farmers and the government over agricultural exports threatens to slow the growth of South America's second-largest economy as a national strike disrupts trade for the second time since March.

Farmers vowed to block grain shipments for eight days after talks over a new variable export tax collapsed May 7. Overnight truck arrivals at Parana River ports, which handle most of Argentina's grain exports, plunged 97 percent today from a year earlier, the Rosario Board of Trade said on its Web site.

Disruptions from the dispute may shave 1 percentage point off economic growth in Argentina, said Alfredo Coutino, a Latin America economist at Moody's Economy.com. Roadblocks that began in March after the tax regime was introduced led to food shortages, slumping exports and the biggest anti-government protests in Argentina since 2001.

“These frictions have introduced uncertainty, particularly in the eyes of foreign investors,'' Coutino said yesterday via e-mail. “All these factors will make us reconsider our forecast for Argentina.''

Coutino estimates the economy will grow 7 percent this year. Alberto Bernal, Bear Stearns Cos.'s managing director of fixed-income research in New York, said he lowered his growth forecast for the year to 7 percent from 7.5 percent last month because of the dispute.

Export Earnings

Argentina, the world's second-largest corn exporter and No. 3 in soybeans, relies on agriculture for more than half of its export earnings. President Cristina Fernandez de Kirchner has said that the new export taxes will help curtail inflation. She didn't address the farm strike in two public speeches yesterday.

“Since the new tax system was announced, the economy seems to be cooling off,'' Mario Llambias, president of the Argentine Rural Confederation, said in a televised press briefing from the northern province of Chaco. “When international markets, local economic activity and technological advances could have allowed us to grow, we are instead discussing ways to survive.''

Alfredo De Angeli, a farm leader in Entre Rios province, told reporters that the strike will continue “as long as necessary.''

The tax system put in place in March levies soybeans and sunflower seeds at more than 40 percent, depending on market prices, compared with a previous fixed rate of 35 percent.

“The issue is that they think the variable taxes have to be abolished and we don't,'' said Cabinet Chief Alberto Fernandez in an interview with Radio 10 in Buenos Aires, according to a transcript sent by his press office.

Revenue Doubled

Export-tax revenue, including duties on agricultural goods and fuels, more than doubled to 1.5 billion pesos ($472 million) in April from a year earlier, the government reported on May 5.

Argentina's development is being “seriously damaged'' by the export tax system, the country's soybean association, known as Acsoja, said in an e-mailed statement yesterday.

Soybean futures for July delivery rose 48 cents, or 3.7 percent, to $13.58 a bushel on the Chicago Board of Trade guaranteed approval cash advance loans. Prices gained 6.3 percent since May 6.

Farmers have “gone mad'' and “missed a big opportunity for dialogue,'' Cabinet Chief Fernandez said on Radio 10 this morning.

“It's hard to control the farmers,'' said Raul Victores, president of the Rural Society of San Pedro, in northern Buenos Aires province. “They are just too upset.'' He said growers in San Pedro were stopping all traffic, not just grain trucks.

Former Argentine President Eduardo Duhalde said yesterday that he backs the farmers and that the president should say she made a mistake, newspaper La Nacion reported.

Support Sought

Llambias and Eduardo Buzzi, president of the Argentine Agrarian Federation, called on provincial governors and congressmen to support their protests.

“You are either with the central government or you are with the people who voted for you,'' Buzzi said today during the press briefing in Chaco.

The trade group representing Argentine cargo-truck companies said its members can't afford the losses caused by the strike and that they'll ask the government to keep roads open.

“We are in a very complicated situation, with a high level of instability,'' Marcelo Mugas, the trucking group's director, said in a telephone interview in Buenos Aires yesterday. “We are worried, and we wish farmers and the government would reach an agreement as soon as possible.''

The worsening of the dispute has pressured Argentine bonds and raised the risks of default.

Bond Yields Rise

The yield on Argentina's benchmark 8.28 percent bond maturing in 2033 has climbed 21 basis points, or 0.21 percentage point, this week to 10.368 percent, according to composite data compiled by Bloomberg. The price has fallen 1.69 cents on the dollar this week to 80.25 cents.

The risk of owning Argentine bonds neared the highest since June 22, 2005, according to Bloomberg data. Five-year credit- default swaps based on the country's debt increased to 6.27 percentage points. That means it costs $627,000 to protect $10 million of the country's debt from default.

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Argentina's Merval index rose 0.6 percent to 2,114.44. Cresud SACIF y A, which rents Argentine farmland and raises cattle, fell 3.9 percent to 4.90 pesos, the lowest price since April 16.

“I hope we can find a solution, but after 36 days of negotiations without results, it's hard to be optimistic,'' said Rodolfo Premoli, vice president of the Rural Society of Azul, in central Buenos Aires province.

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