March 13, 2009

Argentina's roads and railways requires urgent investment, as continued disrepair could limit grain exports.

 

Argentina's farmers harvested nearly 100 million tonnes of grain crops last year and the government hopes output to reach 148 million tonnes in seven years.

 

However, with crops being grown and cattle grazed in more remote parts of the country, farmers are concerned that the over-stretched transport system will struggle to handle big harvests.

 

Jorge Tesler of cargo consulting firm TGI Argentina, said they would not be able to get the increased produce off the farms without the logistics.

 

Argentina's farm exports have soared in recent years but industry officials said investments in highways, ports and railways built in the 19th century have not been in line with the farming boom.

 

Argentina's main grain ports lay in and around the central city of Rosario, more than 1,000km from the northern farming provinces where farmers face high transport costs.

 

A recent fall in global soy prices has squeezed profit margins dry, fueling demand from farmers for improvements and extensions to the existing rail cargo system.

 

Argentina has invested millions of dollars in port facilities in recent years, but industry specialists say greater spending will be required if output targets are met. The specialists also said rural roads are neglected and damaged by heavy rains, and severe traffic jams have occurred during harvest time.

 

About 70-80 percent of Argentina's grains are carried to port by truck, as its national rail system was virtually dismantled after the privatisation in the 1990s, while only one million tonnes of grains are taken to port by boats on the Parana River.

 

Rail development would benefit the farmers and save Argentina millions of dollars, an industry official said.

 

Although both the former and current presidents have reopened some rail lines, critics said the government has failed to address the problem and a coordinated rail development plan should be drawn up.

 

The perfect solution to cargo problems in northwestern and northeastern Argentina is to have cheap transport such as railway but at the moment it does not exist, said Ramon Puchulu, a farmer from Tucuman.