May 6 (Bloomberg) -- Argentine farm groups extended talks with the government after Cabinet Chief Alberto Fernandez proposed changes to an export tax that triggered a three-week strike in March and plans for more protests.

``The government recognized that there are errors in the export tax and in consequence they can be rectified,'' Eduardo Buzzi, head of the Argentine Agrarian Federation, one of four farm groups negotiating with the government, told reporters after he left the meeting in Buenos Aires.

The cabinet chief will meet with President Cristina Fernandez de Kirchner today to resolve the terms of the proposal, a government official said. Farmers who had been preparing to block highways tomorrow will wait another day as talks continue, said Luciano Miguens, head of Argentina's Rural Society, the biggest farm group.

An agreement over export taxes may ease a dispute that threatened to disrupt exports of food from Argentina and erode government revenue. More than half of the country's exports come from agriculture.

Farmers, angered by an export tax announced in March that levies soybeans at more than 40 percent, halted shipments during a three-week protest that ended in a truce on April 2. Farmers will return to block highways this week, targeting grains destined for export, if the tax isn't repealed, Hugo Biolcati, vice president of the Rural Society, said in an interview yesterday.

Prices Fall

Soybean prices fell on the Chicago Board of Trade, erasing earlier gains, after the farm groups agreed to extend talks. Soybean futures for July delivery fell 9 cents, or 0.7 percent, to $12.77 a bushel. The price still has gained 74 percent in the past year on increased demand for animal feed and vegetable oil.

Argentina's farm strike in March became the biggest political challenge to the government since 2001, when the country suffered its worst economic crisis ever, Biolcati said. Hundreds of protesters gathered outside the presidential palace and clashed with pro-government supporters in March and April.

The government needs to encourage Argentina's farmers to produce more to prolong a recovery in the economy that began in 2003, said Mauricio Macri, the mayor of Buenos Aires.

``Only thanks to the agriculture sector will we get out of crisis,'' Macri told television channel C5N today.

Tax Regime

Former Economy Minister Martin Lousteau, who designed the new tax regime, stepped down on April 24. The system included a variable-export-tax rate for corn and wheat.

Taxes increase in tandem with prices on the Chicago Board of Trade, compared with a previous fixed rate of 35 percent. Farmers are also protesting price caps on domestic sales on a range of foodstuffs and bans on beef and wheat exports.

``The government is a partner if we do well and when we start to lose money they forget about us,'' said Pablo Pautassi, a soybean farmer in the province of Cordoba, the biggest soybean-growing region in the country.

Argentina is the world's second-largest corn exporter after the U.S. and the third-largest soybean grower after the U.S. and Brazil. Both commodities are used mainly as animal feed.

Blockade Ready

Farmers already are withholding some of this year's harvest as they await the outcome of the talks, Biolcati said. Crops are being stored in plastic silo bags, where they can be kept for several months without perishing, he said.

Alejandro Ferrero, a farmer who led a blockade of a highway linking Cordoba to Parana River ports in March, is preparing to stop traffic in the department of Marcos Juarez, a locality in Cordoba that exports more than $100 million of soybeans a year.

Ferrero said farmers manning the blockades will attempt to halt trucks carrying grains and oilseeds for export while allowing domestic foodstuffs to pass.

``We will ask truck drivers carrying grains for export to turn back,'' Ferrero said in an interview yesterday. ``The idea is not to interrupt local food supplies.''

Should the talks fail to satisfy farmers, blockades may hurt Argentina's principal grains exporters, which include Cargill Inc., the largest U.S. agricultural company, Bunge Ltd. and Archer Daniels Midland Co.

`Money Leaves'

Argentina's export tax revenue rose 107 percent in April from a year earlier to 1.5 billion pesos ($473 million), Economy Minister Carlos Fernandez said yesterday. Soybeans, the country's biggest export, touched a record high of $15.8625 on March 3 in Chicago. Corn has risen 55 percent in the past year.

Farmers say the taxes they pay to the federal government aren't reinvested in rural provinces.

``All the money leaves this place and nothing comes back,'' Antonio Besso, who grows soybeans and raises cattle, said in an interview as he sat with other farmers on the edge of a highway May 4. ``We should be doing fantastically right now.''

Argentina's government yesterday announced a measure to lift a ban on beef exports, a gesture that may facilitate talks today, said Ulises Forte, vice president of the Argentine Agrarian Federation, which represents the country's smaller farmers.

``What we need is the market to be opened'' for all of Argentina's food exports, he told television channel C5N.

To contact the reporter on this story: Matthew Craze in Buenos Aires at mcraze@bloomberg.net.

Last Updated: May 6, 2008 17:57 EDT