December 22, 2004

 

 

Argentina Wheat Harvest Faces Threat Of Diesel Shortage

 

Argentine farmers are reporting shortages of diesel fuel at the peak of this year's wheat harvest, agricultural leaders said Tuesday.

 

"We are seeing shortages of diesel fuel throughout the province of Buenos Aires that are affecting both the harvest of wheat and the planting of soy," Argentine Agrarian Federation leader Jorge Solmi told Dow Jones Newswires.

 

"We sent a letter to Planning Minister (Julio) De Vido yesterday asking him to find a solution with the Energy Secretariat," Solmi added.

 

Solmi's concerns were echoed in various reports in local newspapers Tuesday, as the shortage has come a month after warnings by a petroleum company official.

 

"We have been receiving reports of diesel shortages ... in too many locations for it to be a distribution problem," grain stockpiler Raul Tomas told newspaper El Cronista.

 

Although the problem is not yet severe, Tomas warned that yields could fall off sharply if diesel shortages end up delaying harvests beyond their optimal dates.

 

Tomas heads Argentina's Federation of Grain Silo Operators, which represents some 1,000 small- and medium-size farmers through 15 clearing centers.

 

The pinch has been especially felt in southern Buenos Aires province as harvesters deplete their diesel reserves, Tomas said. The shortage has been eased somewhat by heavy rains that have slowed the combines, he added.

 

The diesel-shortage claims were backed up by Carlos Calabro, the president of a national gas station owners' group.

 

"We have anticipated this problem for 20 days now," Calabro told newspaper La Nacion. "Right now, the shortage is noticeable in the whole country although the problem is largely localised in the areas harvesting wheat."

 

News of a fuel shortage comes as the Agriculture Secretariat reported that, as of Friday, only 44% of this season's wheat crop had been harvested.

 

Analysts also estimate this year's wheat harvest could be as much as 1.5 million metric tons larger than last season, possibly further compounding demand for diesel fuel.

 

Petroleum company officials critical of government import taxes on diesel have been warning of a potential fuel crunch for weeks.

 

On Nov. 4, a top representative for ExxonMobil Corp.'s (XOM) local unit, Esso Petrolero Argentina S.R.L., told business leaders that, with local refiners already operating at capacity, imports would be the only way to stave off harvest-season shortages.

 

"We would love to import diesel to meet the needs, but the government's import taxes make it economically impossible," a petroleum company official said Tuesday.

 

"The government has indirectly set a local price for diesel that is 20% below world prices," the official added. "The solution is a return to a free market that will allow imports to resume."