Argentina’s grain transporters lift strike after an agreement on the freight rate

RIO DE JANEIRO, BRAZIL – Argentine grain transporters lifted this Friday the strike that started last Monday, in the middle of the heavy harvest, after achieving an update of the freight reference rate because of the increase in the price of diesel oil and a commitment to supply this fuel.

The Federation of Argentine Transporters (Fetra) lifted the strike as a result of a negotiation within the scope of the Ministry of Transport in which it achieved a 20% increase in the national tariff for the transport of grains, cereals and oilseeds applied immediately and a next meeting in the first half of next May to review that increase, according to a statement released on Friday.

The carriers also received the message that the supply of diesel oil is normalized since the Energy Secretariat gave “its commitment” to solve the problem of supply of this fuel to the Transport authorities, according to Fetra.

Gasoil, as it is commonly called in Argentina, is a fuel widely used for transporting cargo by trucks and for running agricultural machinery when the soybean and corn harvest in the South American country and the shipment of grains to the ports is gaining momentum.

In recent weeks, there have been shortages of this fuel, which forced some parts of the country to apply dispensing quotas at gas stations and develop an informal diesel market at prices above the reference price.

The shortage was caused by a sharp increase in diesel price, in a scenario of generalized international increases in energy prices since the Russian invasion of Ukraine, and a gap in the price allowed at the local pump.

The grain transporters’ strike had achieved a high level of compliance, which led the agribusiness chain to warn about the losses generated in the middle of the heavy harvest, the impact on the credibility of Argentina, one of the largest agricultural producers in the world, as a food supplier and the attack on the fiscal and foreign currency income that the country needs.

SUPPLY

Last Wednesday, the Energy Secretariat held a meeting with Argentina’s main refineries and asked them to produce at 100% of their capacity. At the same time, they stated that “the supply of fuel for the agricultural sector was guaranteed,” according to the Ministry.

In addition, the oil company YPF, Argentina’s largest hydrocarbon producer, announced a week ago that it was committed to increasing by 10% its diesel supply in the whole month of April compared to the same month of 2019 and that it would make an effort to import 150 million liters of diesel before the end of this month and another 100 million liters during the first two weeks of May when the agricultural harvest is at full capacity.

Argentina is an oil and gas producing country, and even though production volumes are growing, they are not enough to cover all demand, and the country is forced to import various energy products -including diesel- at costs that have skyrocketed, putting even more pressure on the country’s unbalanced fiscal accounts.

With information from EFE