Lawmakers loyal to President Cristina Fernandez scurried to gather the votes needed to raise land taxes in Argentina's No. 1 grains province on Wednesday, while farmers went on strike to fight the proposal.
Industry insiders do not expect the planned five-day suspension of grains sales by Buenos Aires farmers to slow exports from Argentina, the world's third-biggest soybean supplier. But if lawmakers approve the tax hike, more protests could follow and international shipments could be disrupted.
Argentina is also the world's No. 2 corn supplier and its biggest source of soymeal, which is used to feed cattle in China's booming beef industry. It is also the No. 1 exporter of soyoil, used for cooking and making biofuels.
Most of Argentina's grains output comes from Buenos Aires, located at the heart of the country's vast Pampas farm belt. The push to increase tax revenue comes as Argentina's economy slows under the weight of Europe's financial mess and slackening demand from key trade partner Brazil.
In provincial capital La Plata, the Chamber of Deputies had been expected to easily pass the measure on Wednesday after it sailed through the Senate last week. But a last-minute lobbying blitz by farm groups brought passage into question.
President Fernandez's legislative allies asked for a delay in starting the debate, saying they needed more time to gather the necessary votes.
"Support for the tax increase is now in doubt," Pedro Apaolaza, vice president of the Rural Federations of Argentina, or CRA, told local media.
He and other leaders of the country's main farm groups were in La Plata to direct the lobbying effort.
Provincial farm minister Gustavo Arrieta said the tax hike was justified. "Rural land values have not been revalued for 15 years while urban real estate values have been readjusted six times over the last 10 years," he told reporters.
High world soy prices have helped jack up land values in Argentina. But farmers, still hurting from a drought that parched key Pampas growing areas in December and January, say the tax increase would force some of them to sell their fields.
Labor disruptions are common in Argentina, where double-digit annual inflation fuels steep wage demands. Some strikes last only hours or a few days, and the government intervenes when they drag on long enough to halt key soy and corn exports.
But Fernandez, who has feuded for years with the farm sector over policies such as curbs on corn and wheat exports, would not be able to force farmers to resume selling agricultural products should the strike continue past Sunday.
Widespread farmer protests against soy export taxes disrupted grain exports in 2008 and 2009. Those strikes rattled the government of Fernandez, who nonetheless went on to win a landslide re-election in 2011 based on strong growth in Latin America's No. 3 economy.