Argentine farmers halt grain sales

Strike over export curbs rekindles a dispute that helped drive global grains prices to record highs three years ago.

    Soybean group Acsoja has estimated that production would fall by 13 per cent as a result of water shortages [EPA]

    Argentine farmers have halted sales of wheat, corn and soy in a strike over export curbs, rekindling a dispute that helped drive global grains prices to record highs three years ago.

    The seven-day protest by growers, which started on Monday, could fuel supply concerns just as dry weather linked to the weather phenomena La Nina worsens the outlook for soy and corn production.

    Farmers in Argentina, one of the world's biggest food suppliers, have been at odds with the government for years over export curbs aimed at taming inflation and guaranteeing affordable supplies of everyday staples.

    They say the system of wheat and corn export quotas lets millers and exporters pay farmers low prices, and have urged the government to scrap the caps.

    "These distortive, interventionist measures have been repeated for several harvests in recent years," Hugo Biolcati, leader of the Argentine Rural Society, said when the country's four farming groups announced the strike last week.

    The protest is bad news for Christina Fernandez, the president, nine months from the October election in which she is widely expected to seek re-election.

    The wave of farmer strikes that began in March 2008 over a tax hike on soy exports battered her popularity, hit Argentine asset prices and disrupted grains shipments at the height of the soy harvest.

    However, the impact of this week's protest on grains prices will likely be muted because soy and corn harvesting has yet to begin. 

    La Nina effect

    Government officials condemned the farmers for calling another strike, even warning of possible flour shortages, although Julian Dominguez, the agriculture minister, acknowledged wheat farmers' problems.

    The government is taking steps to ensure mills and exporters paid fixed local wheat prices to farmers and punish those that did not.

    Dominguez advocated an even stronger state role in the country's multibillion-dollar grains trade during a weekend newspaper interview.

    La Nina
      La Nina is a weather phenomena causing abnormal cooling of the central and eastern Pacific.
      Generally, La Nina will mean that parts of the world that normally experience dry weather will be drier and parts with wet weather will be wetter.
      La Nina translates from Spanish as "The Little Girl" and is meteorologically the opposite of the El Nino.
      La Ninas occur on average every three to five years and will typically last for up to 12 months.

    "What the grains trade needs in Argentina is the presence of the state in the market - going back to the model of the Federal Grains Agency or National Grains Board, a body made up of the grains exchanges, the state, the co-operatives, that can ensure the market works for farmers," he was quoted as telling Tiempo Argentino newspaper.

    Low rainfalls began worrying the agriculture industry in December in response to La Nina diminishing rain over Argentina. Weather fluctuations have helped lift corn and soy prices close to their record highs of 2008 in recent weeks.

    Soaring prices are good news for farmers, but the parched soils are worrying farmers across Argentina's famous Pampa plains.

    Argentina is the world's leading exporter of soyoil and soymeal and the third-largest global supplier of soybeans. It is also a major wheat supplier and the second-largest corn provider.

    Soy exports brought in $12.98bn in 2009, accounting for 23 per cent of total export earnings.

    But this year, soybean group Acsoja has estimated that production would fall by 13 per cent as a result of water shortages.

    La Nina, which affects weather patterns across the Asia-Pacific region and in particular the amount of rainfall, is threatening to expand drought in the Americas while bringing more devastating rains to Australia, according to the US Climate Prediction Centre.

    La Nina-inspired rainfall has pushed Australia into recording its third wettest year on record in 2010 while causing drought in grain-growing areas of the southern US as well as in Brazil and Argentina.

    SOURCE: Agencies


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