(May 8)  (Bloomberg) -- Argentine farmers began their second national strike in as many months by blocking grain exports and withholding crops to protest tax increases and price caps on domestic food.

An eight-day strike was called yesterday after a collapse in talks with the government, and farmers began to stop trucks on highways across the country last night. Alfredo De Angeli, a farmer who was among the leaders of a three-week protest in March, urged President Cristina Fernandez de Kirchner to intervene.

``We're not going to back down,'' De Angeli told protesters at a rally held on a highway linking Argentina with Brazil. ``If the president wants us to be here more days, we will be here,'' De Angeli said in comments broadcast on local television.

The protests threaten to deepen a global food shortage and hurt South America's second-biggest economy. Argentina, the world's second-largest corn exporter and No. 3 in soybeans, relies on agriculture for more than half of its export earnings. The government imposed the export taxes and food-price caps to combat domestic inflation.

Cabinet Chief Alberto Fernandez, who led the government's talks with farm-group leaders, refused to continue the meetings yesterday after saying the threats to disrupt grain shipments amounted to ``extortion.'' Farmers in Cordoba and Entre Rios provinces gathered on highways and impeded access to trucks carrying corn and soybeans hours after his comments.

Popularity Suffers

President Fernandez didn't refer to the strike in a televised speech yesterday after farmers declared their intention to protest. The Agriculture Secretary's press office didn't respond to a telephone call seeking comment.

``The way this affair has been handled by the government, along with high inflation, should continue to weigh negatively on the government's popularity,'' Bertrand Delgado, a Latin America economist for IDEAglobal, a New York-based research firm, said in an e-mailed note yesterday.

Public approval of Fernandez's performance dropped to 29 percent from 35 percent in March, the Buenos-Aires based polling company Graciela Romer & Associates said May 6.

The government blames accelerating inflation on the farmers' strike that emptied supermarket shelves before ending April 2, said Sergio Berensztein, a Buenos Aires political analyst at pollster Poliarquia Consultores.

Inflation Accelerates

Consumer prices rose 8.8 percent in March from a year earlier, according to the government. Some economists dispute the figure. Inflation that month probably was 22 percent to 23 percent, according to Alexandre Schwartsman, the chief economist for Latin America at ABN Amro in Sao Paulo.

``There was no agreement because one side of the table wasn't interested in reaching an accord,'' Berensztein said. ``The government is far more comfortable with confrontation and creating an enemy in the eyes of the people.''

The risk of owning Argentine bonds jumped yesterday by the most since April 25, the day after Economy Minister Martin Lousteau resigned, according to Bloomberg data. Five-year credit default swaps based on the country's debt climbed 16 basis points to 6.10 percentage points. That means it costs $610,000 to protect $10 million of the country's debt from default.

Argentina's Merval index fell the most in five days, losing 1.6 percent to 2,093.99. Cresud SACIF y A, which rents Argentine farmland and raises cattle, slid the most since March 19, falling 3 percent to 5.12 pesos.

Export-Tax Dispute

Farmers want the government to modify a variable export tax introduced almost two months ago. The tax levies soybeans and sunflower seeds at more than 40 percent, depending on prices, compared with a previous fixed rate of 35 percent.

Lousteau resigned April 24 as farmers protested across the country, provoking food shortages, halting grain exports and prompting the biggest anti-government demonstrations since 2001.

Soybeans rose 2.5 percent to $13.09 a bushel on the Chicago Board of Trade yesterday, their first gain this week, on concern supplies may be disrupted. The price has surged 80 percent in the past year.

``Sounds to me like the Argentine government is still taking a hard line and that farmers are unlikely to be mollified,'' said Anne Frick, a senior oilseed analyst for Prudential Financial in New York. ``The market's response is surprisingly tepid, in my view, given what looks to me like the increased likelihood of some export impediments.''

Withholding Supply

Farmers will withhold their grain from the market during the strike, Argentine Rural Confederation President Mario Llambias said yesterday at a press conference in Buenos Aires.

``We are not going to sell grains for export,'' Llambias said. ``If the government doesn't address the heart of these issues, it's going to be harder to resolve the problems facing our country.''

Supplies to exporters fell 50 percent last month as farmers withheld their soybean and corn harvests on expectation of a change in the tax, Cesar Gagliardo, president of Buenos Aires grains brokerage Artegran SA, said in an interview yesterday.

``Farmers aren't selling grains under these authoritative measures, as this is almost confiscation,'' said Gagliardo, who sells crops to exporters such as Cargill Inc. and Bunge Ltd. ``The countryside is full of plastic silo bags, and farmers are using old silos or disused barns to store their harvests.''

(Editor: Shuomeng Wang)