Farm losses surge in Mexico as fuel crunch likely to hit
economy
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[January 15, 2019]
MEXICO CITY (Reuters) - Agriculture losses
caused by Mexico's ongoing fuel shortage are estimated at nearly $300
million, a sector leader said on Monday, and overall economic growth is
also likely to be hit as the government struggles to stabilize gasoline
distribution.
Losses of at least 5.5 billion pesos ($290 million) have been reported
by major farm and ranching businesses as delayed shipments and spoiled
supplies have accumulated due to shortage of motor fuels that are
required to transport products, Bosco de la Vega, who heads Mexico's
National Farm Council, told Reuters.
Berries, avocados and tomatoes are vulnerable and have relatively short
shelf lives, and the situation will worsen if fuel supply and
distribution are not normalized soon, De la Vega explained.
"In the next 10 days, if this issue isn't resolved, I think we will have
a serious shortage of perishable food," he added.
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Meanwhile, Mexico's economy could contract in January due to a slowdown
in activity caused by the fuel shortage.
Late last month, President Andres Manuel Lopez Obrador began cutting
supply from major fuel pipelines that have been tapped for years by
thieves, a move that has led to long lines of frustrated motorists
waiting hours to fill their tanks.
Criminal groups have tapped pipelines and stolen tanker trucks carrying
diesel and gasoline in the oil-producing country for years, costing the
government billions of dollars.
Lopez Obrador's offensive against fuel robbers marks the leftist's first
attempt to tackle entrenched corruption since taking office on Dec. 1.
Jonathan Heath, one of Lopez Obrador's nominees to serve on the central
bank board, told a congressional hearing on Monday that shortfalls
stemming from the government crackdown on fuel theft could become a
serious risk if they go on for weeks.
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![](../images/011519pics/busine55.jpg)
An employee fills a vehicle with fuel at a gas station in Mexico
City, Mexico, January 14, 2019. REUTERS/Henry Romero
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"For January, right now I'd think that we could see a negative rate (of
growth)," Heath said. "If it goes on beyond February and March, who knows when
we could start to get into something dangerous, and then I would be more
worried."
"If it's a problem that lasts a week or two more weeks, and we see things
starting to work themselves out, I think the effects could be minimal," the
economist added.
Industry groups say the economy could suffer if the bottlenecks in supply are
prolonged.
Several states complained they were given no warning by the government that it
was about to shut down major pipelines in order to stop the theft that has
caused billions of dollars worth of losses to Mexico in recent years.
The government launched its crackdown on theft on Dec. 27, and traders started
to feel the crunch about a week later.
($1 = 18.9821 Mexican pesos)
(Reporting by Adriana Barrera and Sharay Angulo; Editing by Chris Reese and
Sherry Jacob-Phillips)
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