Protests at Key Argentina Port Causing Headaches
Cargo Pier at Port of Rosario
A spike in shipping costs and lower profits resulting from a series of union protests at Argentina's Rosario port, one of the world's biggest grain export centers, has raised concerns among the country's agricultural companies.
Strikes by powerful unions representing river pilots, longshoremen and soy crushing workers have been frequent at the port, about 300 kilometers (200 miles) north of Buenos Aires, where some of the world's top grain traders - such as Cargill , Bunge and Louis Dreyfus - operate.
Port reliability is key to the country, which relies heavily on farm export taxes to fund government spending, since the country has been locked out of international bond markets since its massive 2002 sovereign default.
Grains powerhouse Argentina - the world's No. 3 corn and soybean exporter - will be counted on to help meet rising food demand as global population grows toward 9 billion by 2050. So world consumers also hold a stake in the health of its ports.
Protestors have been demanding pay increases to compensate for eroding purchasing power caused by inflation in Argentina, one of the world's highest rates, estimated by private analysts at about 25 percent.
Union protests, among other things, have blocked bean deliveries to soyoil processing plants and help guiding ships into port.
Delays in loading ships can be costly. Docking a Panamax-sized vessel with a capacity of 65,000 tonnes of grain costs about $13,000 to $17,000 a day, according to the Capym port industry chamber.
"Argentina, as a net exporter of grains, is subject to international prices, so any additional costs that the sector faces implies a reduction in the price that producers receive in the field, affecting the profitability of the agro-industrial chain as a whole," said Capym director Guillermo Wade.
Wade added that "the delay in shipments causes uncertainty among foreign banks that pre-finance Argentine exporters, due to the risk that the latter will default."
The port handles nearly 80 percent of the grains and derivatives shipped from Argentina, the world's top soymeal and soybean oil exporter.
Ship captains, grains inspectors and watchguards have also taken collective action recently, in some cases because of disputes among unions vying for power.
Up to 100 ships have been left waiting when strikes have gone on for more than a few days. Normally, 2,400 ships pass through the Rosario area each year.
Businesses in the sector have also complained that a range of bureaucratic hurdles, such as changes in rules governing how deep ships are allowed to go as they pass through port, have made operating in the area even more difficult.
Argentina harvested 49.3 million tonnes of soybeans and a record 32.1 million tonnes of corn in the 2012/13 season, far exceeding volumes a decade ago. Specialists say those numbers should continue rising in coming years.
Agriculture exporters have complained, however, that the sustained growth in Argentine farm output has not been accompanied by adequate port development. And they say the problem may get worse before it gets better.
The wage tensions that have led to most strikes are not likely to go away anytime soon, considering the approach that President Cristina Fernandez has taken toward Argentine inflation.
With two years to go before the end of her second term, Fernandez says consumer prices are rising at about half the rate estimated by private analysts. The disparity in statistics has been an ongoing source of tension between her government and the International Monetary Fund.
Copyright Reuters 2013.