Protests at key Argentina port cause headaches for exporters

Reuters

By Nicolás Misculin

BUENOS AIRES, Oct 3 (Reuters) - A spike in shipping costsand lower profits resulting from a series of union protests atArgentina's Rosario port, one of the world's biggest grainexport centers, has raised concerns among the country'sagricultural companies.

Strikes by powerful unions representing river pilots, longshoremen and soy crushing workers have been frequent at theport, 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 heavilyon farm export taxes to fund government spending, since thecountry has been locked out of international bond markets sinceits massive 2002 sovereign default.

Grains powerhouse Argentina - the world's No. 3 corn andsoybean exporter - will be counted on to help meet rising fooddemand as global population grows toward 9 billion by 2050. Soworld consumers also hold a stake in the health of its ports.

Protestors have been demanding pay increases to compensatefor eroding purchasing power caused by inflation in Argentina,one of the world's highest rates, estimated by private analystsat about 25 percent.

Union protests, among other things, have blocked beandeliveries to soyoil processing plants and help guiding shipsinto port.

Delays in loading ships can be costly. Docking aPanamax-sized vessel with a capacity of 65,000 tonnes of graincosts about $13,000 to $17,000 a day, according to the Capymport industry chamber.

"Argentina, as a net exporter of grains, is subject tointernational prices, so any additional costs that the sectorfaces implies a reduction in the price that producers receive inthe field, affecting the profitability of the agro-industrialchain as a whole," said Capym director Guillermo Wade.

Wade added that "the delay in shipments causes uncertaintyamong foreign banks that pre-finance Argentine exporters, due tothe risk that the latter will default."

The port handles nearly 80 percent of the grains andderivatives shipped from Argentina, the world's top soymeal andsoybean oil exporter.

Ship captains, grains inspectors and watchguards have alsotaken collective action recently, in some cases because of disputes among unions vying for power.

Up to 100 ships have been left waiting when strikes havegone on for more than a few days. Normally, 2,400 ships passthrough the Rosario area each year.

Businesses in the sector have also complained that a rangeof bureaucratic hurdles, such as changes in rules governing howdeep ships are allowed to go as they pass through port, havemade operating in the area even more difficult.

Argentina harvested 49.3 million tonnes of soybeans and arecord 32.1 million tonnes of corn in the 2012/13 season, farexceeding volumes a decade ago. Specialists say those numbersshould continue rising in coming years.

Agriculture exporters have complained, however, that thesustained growth in Argentine farm output has not beenaccompanied 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 notlikely to go away anytime soon, considering the approach thatPresident Cristina Fernandez has taken toward Argentineinflation.

With two years to go before the end of her second term,Fernandez says consumer prices are rising at about half the rateestimated by private analysts. The disparity in statistics hasbeen an ongoing source of tension between her government and theInternational Monetary Fund.

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