Tuesday, 18 January 2011

Bad economic policies - Argentine farmers halt grain sales

The seven-day protest by growers in the South American nation, one of the world's biggest food providers, could fuel supply concerns just as dry weather linked to the La Nina weather pattern worsens the outlook for soy and corn production. Argentine farmers have been at odds with the government for years over export curbs aimed at taming double-digit inflation and guaranteeing affordable supplies of everyday staples. The farmers say a system of wheat and corn export quotas lets millers and exporters pay farmers low prices, and they demand that President Cristina Fernandez scrap the caps so they can enjoy high wheat prices as they harvest a bumper crop.

Argentine Farmers harvesting grain crops

The wave of farmer strikes that began in March 2008 over a tax increase on soy exports battered the president's popularity, hit Argentine asset prices and disrupted grains shipments at the height of the soy harvest. The latest protest is not expected to rouse the same public interest or support as in 2008, and the impact on grain prices will likely be muted because soy and corn harvesting has not yet begun.

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