Colombia suffers food and fuel shortages as truck drivers block roads

(Bloomberg) — The fourth day of road blockades by protesting Colombian truck drivers has sparked warnings of nationwide food and fuel shortages.

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Bogotá Mayor Carlos Fernando Galán said on Thursday that the capital still had four days' worth of kerosene and six days' worth of regular gasoline.

Fuel supplier Organización Terpel SA urged its customers to “rationalize” kerosene use at airports such as Cartagena and Bucaramanga. With roadblocks also preventing other supplies from reaching markets across the country, Colombia's main agricultural association told Blu Radio that egg production, as well as the poultry, pork and dairy industries, were affected.

Agriculture Minister Martha Carvajalino told radio station La FM that food supplies had fallen by 23 percent on Wednesday, adding that fruits, vegetables and other perishable goods were badly affected, leading to rising food prices.

“With every passing hour, our situation becomes more critical,” she said.

President Gustavo Petro's government is trying to eliminate expensive diesel subsidies that are driving up the budget deficit and making it difficult to finance social spending programs. On August 31, the government raised the price of diesel by 20 percent, to 11,360 pesos ($2.71) per gallon.

The Treasury Department says the increase will save the government $380 million for the rest of the year.

According to Munir Jalil, chief Andean economist at BTG Pactual, food price inflation is already increasing, but the impact will depend on how long the disruption lasts. Nationwide protests and roadblocks during President Ivan Duque's administration pushed food price inflation above 25% in 2022.

Prolonged blockages could prompt the central bank to maintain its pace of rate cuts, although an acceleration is expected at the next meetings, says Andrés Pardo, Latin America strategist at XP Investments. He expects a 75 basis point cut from the current key interest rate of 10.75 percent. The central bank's next monetary policy meeting will take place on September 30.

“If we reach the end of the month without a resolution to the truck drivers' strike, we tend to believe that BanRep will not accelerate the pace of easing,” Pardo wrote in a note on Thursday, adding that the board could decide on another 50 basis point rate cut.

On Wednesday, truck drivers rejected the government's offer to roll back the nearly P2,000-per-gallon hike and instead increase the price gradually by P200 per month to reach an P800 increase by the end of the year.

The story continues

State-controlled oil company Ecopetrol SA warned on Wednesday that its operations were being seriously hampered by a truck drivers' strike, guerrilla attacks on its pipelines and the occupation of a natural gas plant by indigenous protesters.

(Updated with analyst commentary starting in the 9th paragraph. An earlier version of this story corrected the name of the mayor of Bogotá.)

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