Argentine farmers will halt grains sales to protest government curbs on wheat and corn exports, reviving a conflict that helped lift global prices to record highs in 2008.
Growers in the South American country, a leading source of grains and beef, have been at odds with center-left President Cristina Fernandez for years over export restrictions that they say drive down prices in the local market.
The government pledged Wednesday to free up another 3 million tonnes of wheat for shipment, but the announcement failed to appease farm leaders who have been threatening to resume protests for months.
“Despite all the pomp, the announcement that the total wheat surplus will be available for export disguises a miserly system of quotas that serves the interests of powerful groups such as millers and exporters,” said Hugo Biolcati, president of the Argentine Rural Society (SRA).
“What they’ve announced doesn’t meet our objective for wheat markets that function normally,” Biolcati told a news conference alongside fellow leaders of the four farming associations that led months of protests in 2008.
The nationwide demonstrations against grain export taxes has hurt Fernandez’s popularity, disrupted agricultural sales abroad and battered Argentine bond prices.
Renewed protest by farmers is bad news for Fernandez only 10 months away from a presidential election. News of the strike added further support to U.S. corn and soy futures at the Chicago Board of Trade (CBOT).
However, the seven-day commercial strike starting on Monday is not expected to have a major impact on grains prices, traders in Chicago said.
“We’ve assumed that every year about this time they are going to call a strike so the impact is limited,” said Reggie Griffith, analyst for Iowa Grain. “The USDA report today definitely trumped any impact from the strike.”
The U.S. Department of Agriculture (USDA) cut its estimate for 2010/11 Argentine soy Wednesday to 50.5 million tonnes from 52 million tonnes previously due to parched conditions linked to the La Nina weather anomaly.
Agriculture Deputy Secretary Oscar Solis said soy output will likely fall below 50 million tonnes, cautioning it was still early to assess the impact of dry weather on crop yields.
Argentina’s government limits wheat and corn exports through a system of export permit quotas to ensure local needs are met and tame surging prices for daily food staples.
Annual inflation is pegged at between 25 percent and 30 percent in Latin America’s No. 3 economy.
Farmers called the strike after meeting Agriculture Minister Julian Dominguez, who said the additional 3 million tonnes in export permits means a total of 7 million tonnes has been approved for shipment.
Argentina, a major wheat supplier to neighboring Brazil, is expected to produce 14 million tonnes of 2010/11 season wheat, Dominguez said, way up from last year’s drought-hit harvest of about 7.5 million tons.
However, the farm leaders say this does not solve the problem of low domestic wheat prices and heavy state intervention in the market.
They say the current system creates over-supply bottlenecks that allow exporters and millers to pay below the government’s reference price, but officials say the current system of export permit quotas is here to stay.
“We’ve approved the shipment of the entire exportable surplus, we’re giving farmers free loans. We’re using every possible tool available,” the agriculture official Solis told Reuters. (Reuters)