Argentine roads may gridlock grains exports

Argentina’s dilapidated system of roads and railways needs urgent investment, or it could limit grains exports from the South American country, one of the world’s top suppliers of farm goods.

Argentine farmers harvested almost 100 million tonnes of grains crops, such as soy, corn and wheat, last year and the government hopes output will reach 148 million in seven years.

But with crops being grown and cattle grazed in evermore remote parts of the vast nation, farmers say the overstretched transport system will struggle to cope with such big harvests.

“Without the logistics, the day we want to increase production, we won’t be able to get the goods off the farm,” said Jorge Tesler of cargo consulting firm TGI Argentina.

Argentina’s farm exports, which account for more than half its total export earnings, have soared in recent years due to strong global demand for food and biofuels and a favouable exchange rate that has made its goods cheaper.

But many in the industry say the farming boom has not been accompanied by sufficient investment in highways, ports and the railways built in the 19th century, when the country rose to prominence as an agricultural exporter.

Argentina’s main grains ports lie in and around the central city of Rosario, more than 1,000 kilo-metres from northern farming provinces, where farmers face hefty transport costs.

Farmers there say a recent fall in global soy prices has squeezed profit margins perilously low, fuelling demands for improvements and extensions to the existing rail cargo system.

The cost of transporting a tonne of grains by road is about three times more than by railway, said Rogelio Ponton, an economic analyst at the Rosario Grains Exchange. By rail it costs about three cents per tonne per kilo-metre and nine cents by truck.

Neglected

Millions of dollars has been invested in Argentine port facilities in recent years, but industry specialists say greater spending will be required, if output targets are met.

In the United States, most grains are transported by rail and river transport, while in Argentina between 70 per cent and 80 per cent of grains are carried to port by truck.

Argentina’s national rail system was virtually dismantled after the privatization of the 1990s, while only about a million tonnes of Argentine grains are taken to port by boats on the Parana River.

“Rail development would benefit the farmer and save Argentina many millions,” Ponton said.

Since 2003, the government of former president Nestor Kirchner and the current administration of President Cristina Fernandez have overseen the reopening of some rail lines.

“We need to rebuild a railway system like the world’s most developed countries have,” Fernandez said recently at the inauguration of rail repair workshops in the northern region of Tucuman, a big producer of lemons and sugar cane.

But critics say the government has failed to address the problem, and demand a co-ordinated rail development plan.

“The only way to get round the geographical problems we have is to have cheap transport and that is rail, which at the moment doesn’t exist. It would be the perfect solution to the cargo problems in northwestern and northeastern Argentina,” said Ramon Puchulu, a farmer from Tucuman.

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