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 government talks collapsed, 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.

`Extortion'

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.

Pablo Moyano, the head of Argentina's truck drivers union, said his members won't let farmers selectively block the roads.

``Everyone passes or no one passes,'' Moyano told state-run newswire Telam last night.

Ariel Onguino, 46, vice president of El Aguilucho SA, a truck company based in Rosario, said revenue has fallen 40 percent since March and he may lay off some of the company's 250 employees.

The strike is ``irresponsible,'' Argentina's Interior Minister Florencio Randazzo said in comments made to Radio Mitre. ``All they want to do is defend their own interest instead of thinking of the general public,'' he said.

Cronica Television channel showed farmers taking dozens of tractors and trucks to downtown Mar del Plata city in Buenos Aires province to protest. Some demonstrators held signs saying: ``They are lying to you, farmers are on your side.''

Missed Opportunity

By going on strike, farmers lost a chance yesterday to end the dispute, Agriculture Secretary Javier de Urquiza said earlier today in an interview with Buenos Aires-based Radio 10. The government was willing to reach an accord, while farmers were only interested in discussing the export tax, he said.

``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, 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. Annual inflation 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 neared the highest since June 22, 2005, according to Bloomberg data. Five-year credit default swaps based on the country's debt increased 8 basis points to 6.20 percentage points. That means it costs $620,000 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.

Bonds, Stocks

The yield on Argentina's benchmark 8.28 percent bond maturing in 2033 fell 11.7 basis points, or 0.117 percentage point, to 10.374 percent at 3.08 p.m. New York time, according to composite data compiled by Bloomberg. The price rose 0.93 to 80.21.

Argentina's Merval index fell 0.5 percent to 2,084.54 after losing 1.6 percent yesterday. Cresud SACIF y A, which rents Argentine farmland and raises cattle, fell 2 centavos, or 0.4 percent, to 5.10 pesos, following a 3 percent drop yesterday, the biggest loss since March 19.

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.

Export taxes, which include levies on agricultural goods as well as fuels, more than doubled to 1.5 billion pesos ($471 million) in April from a year earlier, the government reported May 5. Export taxes accounted for about 15 percent of government tax revenue last month.

Growth Outlook

Victoria Saddi, a Latin America economist with RGE Monitor in New York, said she's cutting her forecast for Argentine economic growth this year to 6.8 percent from 8.9 percent.

``I don't think the strike is going to be over very soon and exports are an important part of economic growth in Argentina,'' Saddi said in a telephone interview.

Economy Minister Martin Lousteau resigned April 24 as farmers protests caused food shortages and halted grain exports, prompting the biggest anti-government demonstrations since 2001.

Soybean futures for July delivery rose 3 cents, or 0.2 percent, to $13.12 a bushel on the Chicago Board of Trade. 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

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.''

To contact the reporters on this story: Matthew Craze in Buenos Aires at mcraze@bloomberg.net; Eliana Raszewski in Buenos Aires eraszewski@bloomberg.net

Last Updated: May 8, 2008 15:37 EDT