March 9 (Bloomberg) -- Argentine farmers reacted angrily to a government decision to ban beef exports for 180 days, saying the measure will damage their ability to sell overseas and force a reduction in supplies.

``It's a totally disproportionate response to the problem of price increases,'' Javier Martinez del Valle, 44, director of the Argentine Association of Producers and Exporters, said in an interview. ``Even if exports reopen at some point, it will be very difficult for Argentina to recover the confidence of markets.''

President Nestor Kirchner, 56, announced the restrictions last night as a way to increase supplies in the domestic market and temper inflation. Four months ago, the government raised the tax on beef exports to 15 percent from 5 percent.

Beef exports may tumble by about $1 billion this year because of the ban, or two-thirds of last year's total, and 30,000 people may lose their jobs, said Mario Ravettino, executive director of the Argentine Beef Consortium, which includes 17 slaughterhouses that handle 80 percent of the country's total beef exports.

``This is like telling a baker he cannot sell more bread,'' Ravettino said. ``Each one of our companies is expected to be forced to shut down.''

Argentina, the world's third-largest beef exporter after Brazil and Australia, boosted exports of the commodity 40 percent last year from 2004 to about $1.4 billion.

Domestic Supplies

Beef demand in Argentina has dropped to 60 kilos per capita from 100 kilos in 1980 because of a decline in purchasing power, changing eating habits and rising supermarket prices, according to the country's agriculture secretariat.

Economy Minister Felisa Miceli said the ban will help increase domestic supplies by 600,000 tons this year.

Farmers disagree. Already hurt by a February outbreak of foot-and-mouth disease in cattle and higher taxes on exports, the industry may end up cutting supplies, said Enrique de Leon Bellocq, director of Argentine Breeders and Packers, the nation's eighth-biggest beef exporter.

``The measure is a monumental mistake,'' said de Leon Bellocq, 57. ``In the long term this means less supply of beef. We may not have enough to supply the domestic market.''

Ravettino of Argentina's Beef Consortium said they will demand the intervention of the Labor Ministry to fend off possible lawsuits from layoffs.

Price Controls

Kirchner has sought to curb inflation over the past several months by pressing companies to hold back price increases. Last year, he summoned executives from some of the country's largest companies, including Procter & Gamble Co. and Unilever NV, to freeze prices for as long as a year.

The annual inflation rate doubled to 12.3 percent last year from 6.1 percent in 2004 and was at 11.5 percent in February. Beef prices last year rose 29 percent.

Argentines beef consumption accounts for such a large part of household budgets that it makes up 4.5 percent of the national consumer price index. No other single item, including home rentals and transport, has that much of a weighting. In the U.S., beef has a weighting of 0.64 percent of the CPI. Argentina has the biggest per-capita beef consumption in the world.

The beef ban will hurt one of the nation's fastest-growing export industries and a sector that employs more than 30,000 people, said the Chamber of Exporters' de las Carreras.

``It will reduce investment in the beef industry, lead to loss of jobs and cut production of beef in the country,'' he said. ``This has no precedent in Argentina.''

To contact the reporter on this story: Daniel Helft in Buenos Aires dhelft@bloomberg.net

Last Updated: March 9, 2006 15:15 EST