March 25 (Bloomberg) -- Argentine President Cristina Fernandez de Kirchner dismissed demands by farmers that she roll back higher export taxes amid a strike that threatens to be the biggest domestic challenge to her three-month-old government.

``I won't allow myself to be extorted,'' Fernandez said at the presidential palace in Buenos Aires. ``Do we want a country that is only for a select few or a country that is more just, with greater equality?''

Farmers, whose protests have blocked roads and prevented trucks from entering ports and warehouses, showed no signs of wavering. Eduardo Buzzi, president of the Argentine Agriculture Federation, said the strike, including a shortage-inducing halt on produce deliveries, will go on ``as long as necessary.''

Argentina has relied on rising agricultural revenue to help maintain a budget surplus as spending has surged. A variable- rate export tax on soybeans and sunflower seeds, announced March 11, raised the soybean levy to about 44 percent from a fixed rate of 35 percent. Fernandez says the taxes subsidize roads and diesel fuel that farmers need to get their goods to market.

``The government clearly misread the sentiment among farmers in Argentina,'' said Felipe Noguera, a co-founder of the Latin American Association of Political Consultants. ``The depth of their anger is enormous.''

The government is willing to talk with farmers without pre- conditions, Justice Minister Anibal Fernandez indicated today in a Radio America interview.

``There's no other option but to talk responsibly, once everyone has calmed down,'' he said. Farmers and truck drivers who side with the government clashed at roadblocks yesterday, prompting farming groups to ask for police protection.

Worsening Shortages

Goldman Sachs Group Inc. analyst Pablo Morra said food shortages will probably worsen if the protests continue.

``There are already reports of shortages of meat, dairy products and vegetables caused by the strike,'' Morra said in a research note sent by e-mail. Even as shortages deepen from the strike, Morra said, the government ``remains firm in its decision to raise the agricultural export taxes.''

Argentina's grain exports are being affected, said Adrian Seltzer, a Granar SA broker in Rosario, the country's biggest grain-shipping port. Granar has traded grain on the Buenos Aires Cereals Exchange since 1938.

Just 19 trucks carrying soybeans and four with corn reached the port of Rosario today, compared with the 5,000 to 6,000 that arrive on a normal March day, Seltzer said. Rosario handles more than 60 percent of the country's overseas grain shipments.

Argentina is the world's second-largest corn exporter behind the U.S. and the third-largest soybean exporter.

`Diverting Ships'

``As the exporters don't know when this farmers' blockade will end, they are already diverting ships'' from Argentine ports, Seltzer said.

Governors in the agricultural provinces of Chaco, Cordoba and Entre Rios may step in to broker talks between farmers and national government officials, newspaper Clarin said today.

Meanwhile, dwindling choices may confront shoppers at grocery stores in Buenos Aires.

``There's little meat in the capital, and with people returning from their vacations, it will all be gone soon,'' said Alberto Williams, vice president of the Buenos Aires Butchers Association. ``This should end as soon as possible, so it doesn't affect more people.''

To contact the reporters on this story: Matthew Craze in Santiago at mcraze@bloomberg.net; Bill Faries in Buenos Aires at wfaries@bloomberg.net.

Last Updated: March 25, 2008 18:38 EDT