Strike triggers world food supply fears
In Argentina, irate farmers have blocked key roads and halted sales of grains, oilseeds and beef until midnight on Friday, after the government rejected demands to cut a 35% export tariff on soya.
In a move that appeared to have dramatically escalated the country’s row between government and farmers, President Cristina Fernández has announced that revenue from the tariff would be shared nationwide and spent on public works.
Farmers say the levies are strangling their production, especially after the country’s worst drought in half a century, which they say will slash this year’s output of soya 20% and of corn 45%. The wheat harvest, already in, is only half last season’s tonnage.
The soya tariff will take €1.3 billion from farmers, diverted to national tax revenues which have been hit by the global economic crisis.
Opposition senator Gerardo Morales said the government has declared war on the agriculture sector.
The Argentine government last year tried to introduce variable rate export tariffs to cash in on windfall profits from the commodities price boom then raging. But a four-month protest by farmers led to the move being overturned.
Strike fears helped push soya prices in the Chicago futures markets nearly 8% higher last week. Wheat, corn and meat prices also rose.
Commodities markets are braced for more rises, as the increasingly tense farm strike fuels concerns among importers, and strains global stocks.
Argentina is the world’s second biggest exporter of agricultural commodities and sales of soya and corn are critical to importers such as China, who depend on Argentina and Brazil until US harvests become available.
Though farming is Argentina’s top export earner, the country has become an increasingly unreliable supplier.
