Argentine farmers freeze grain sales in protest

The seven-day protest by growers in the South American nation, one of the world's biggest food suppliers, could fuel supply concerns just as dry weather linked to La Nina worsens the outlook for soy and corn production.

Argentine farmers freeze grain sales in protest

Argentine farmers halted sales of wheat, corn and soy on Monday as they went on 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 in the South American nation, one of the world's biggest food suppliers, could fuel supply concerns just as dry weather linked to La Nina worsens the outlook for soy and corn production.

Argentine farmers have been at odds with the government for years over export curbs aimed at taming double-digit 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 want center-left President Cristina Fernandez 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.

This week's protest, which will last until midnight next Sunday, is bad news for Fernandez nine months from an 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.

The latest protest is not expected to rouse the same public interest or support as the 2008 strikes, and the impact on grains prices will likely be muted because soy and corn harvesting has yet to begin.

Weather jitters

In the main grains port of Rosario, trade is generally light at this time of year and soy crushers and exporters increased purchases last week in anticipation of the strike.

"When the strike was called, they started buying to build up stocks," said Lorena D'Angelo, an analyst at Rosario grains exchange.

Traders in the Chicago Board of Trade will likely be more concerned about the impact of parched conditions on Argentina's soy and corn crops than on the farmers' strike.

Crop analysts have started to slash their forecasts for production of the grains -- to as little as 40 million tonnes in the case of soy from initial estimates for about 52 million tonnes.

Weather jitters 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 worsening the mood across Argentina's famous Pampa plains.

"Protests are always a lot stronger when things are bad," Mario Llambias, president of the Argentine Rural Confederations, told Reuters last week in an interview.

Government officials condemned the farmers for calling another strike, even warning of possible flour shortages, although Agriculture Minister Julian Dominguez 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.

"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 cooperatives, that can ensure the market works for farmers," he was quoted as telling Tiempo Argentino newspaper.


Reuters

Last Mod: 17 Ocak 2011, 12:44
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