Between the effects of the drought and doubts about the economy, here’s how the estate is preparing for a turbulent 2023

The challenge ahead agricultural producers this year, in the middle of a drought drama that will leave historic losses behind bars and a significant drop in dollar revenues from agricultural exports. The reconstruction will not be an easy task. However, the estate has its eyes fixed on the next agricultural campaign and is going through a turbulent year 2023 from an economic and political point of view. He fundingwill be a key element in all of this.

In the various consultations that this media has made with leaders in the field and in the agro-industry, the president of the Argentine Chamber of Manufacturers of Agricultural Machinery (Cafma), Edward Borry, He said that “it is clear that, as we have been saying for a long time, there is nothing anyone can do to solve climate problems. We know, in fact, that work is in progress, insofar as There are credits that stimulate demand, this will allow the best-off producer to continue to invest and buy. Industrialists must continue to bet on the growth and maintenance of sources of work, because we are inside the inside”.

Taking into account the seriousness of the problem facing the productive sector, Borri recalled that it “is very resilient and is used to having ups and downs, and that at this moment we know that we have to tighten teeth and keep moving forward. We are days and hours away from the start of the main exhibition in the country, and there we will surely be able to have a greater reality of the spirit of the producer. We know that in itself , it may not be ideal, mainly due to the effect of the drought. It’s always good to keep working together. It’s not good for a sector to run away and that’s why the value chain must be defended as a whole”.

And in this sense, the entrepreneur asked the government to encourage demand with attractive tariffs and maybe even with grace periods to start paying next year, “when things have surely started to look up”. And he added: “We continue to aspire that the reality of Argentina can be solved locally, that is, that the manufacturers who are rooted in the country can have differential support from our official banks , because possibly manufacturers in other countries have not had the impact of the drought that Argentina is experiencing”.

Looking ahead to the next agricultural cycle, Salvador DiStefanoan economic analyst, assured GlobeLiveMedia that currently “the Argentine producer’s mood is bad. The reason is that we have a dry climate and therefore very little will be harvested: We are working with the producers to make them understand that they have to start working on the financial program for the 2023-24 campaign. If there is no revenge, there is no possibility of lifting the difficulties that the last drought season has offered”.

In this regard, the economic adviser indicated that the producers “we try to teach them that they take out loans today. These look like high rates, but it must be said that inflation will be much higher in the future. There are loans at 52% per annum for four years which seem highly recommended. There are also loans at 55% per annum for twelve months, which we believe to be highly recommended. In addition, it is necessary to propose the use of the use of the reciprocal guarantee to take promissory notes to ‘tie the dollar’ at zero rate”.

The objective of the specialist in economic questions is that the producer can begin to assess and analyze the financial aspect of the next crop year. “In 2023, we are going to have a better climate and that will bring in quantity (in cereals) and we are going to have a change of government, and that will give another type of change. Thus, the future scenario is extremely auspicious. I would call it “You must take revenge.” For this, it is necessary at least to buy the inputs. Since many dollars are missing, the reality is that the sooner inputs for planting are available, the better.

Another of the specialists that GlobeLiveMedia consulted on how the field will cope this year amid different issues, was Teo Zorraquin, a reference for the consultancy Zorraquín + Meneses. “Drought damage in general, of course not in all regions or areas, will be very significant. In general there will be bankruptcies and there will be losses (in the balance sheets of agricultural enterprises). In some cases it will be very high and in others it will be total. With whom this will definance the field in general ”.

Looking ahead to the next grains and oilseeds campaign and the funding that producers will need for it, the consultant assured that “funding will come in part from what the farmer can harvest, and another part from the funds he has from previous campaigns. Presumably, in general, there may be some liquidity. We will have to see what each has done with this liquidity. And the usual third step will be bank or trade credit. It is unclear what the costs or fees will be.

And to add: “The bank loan is now worth 100% of the rate and the discount of a check a little less. Apparently, promotions from official banks with rates of 60-70% will come out. This will be a channel that will have to be carefully taken into account. In trade credit there is no clarity in the rates used, but exchange for available grain or future grain, although the latter does not appear. Deferred delivery of checks will be the usual channel for those who dare to face a new campaign”.

After a current agricultural cycle that has gone through very complex moments from the climatic point of view, especially due to the absence of significant rains at times when the crops have formed their yields, for Zorraquín in the next process of cereal production “I think that sand will try to sow everything. If the weather changes Wheat and barley will be sown to have a plant, and not have to wait for the next grease. This year’s final should therefore play an important role in helping to rebuild the finances. In other words, make more wheat soybeans than first class soybeans in areas where double cropping can be practiced”.

David Miazzochief economist of the Fundación Agropecuaria para el Desarrollo de Argentina (FADA), agreed with the other specialists that “Drought generates an economic loss for the producer, where, in the vast majority of cases, they will not be able to cover the expenses they have incurred. This loss becomes a decapitalization and therefore the producer will face the next campaign with less capital. This was due to the fact that he had more costs than income in this campaign.

Furthermore, the economist argued that decapitalization, which he mentioned earlier, could lead to more demand for debt and from there, the producer will need more financing from banks, through credits or cards, or from companies that supply inputs, such as seeds. , fertilizers and phytosanitary products, in order to be able to finance the investment of the next campaign.

“Most of the other players in the channel are coming with some strength because they haven’t been negatively affected by the drought so far. Finally, they can be affected in the next cycle by the lower capitalization that the producer will have, and the latter, given the lack of capital and financing, can invest less”, added Miazzo, who also pointed out that he There are currently difficulties regarding the interest rate on the market.

In this regard, the economist said that “the monetary policy interest rate is at an effective annual rate of 107%. Thus, it is very difficult to offer lines of credit or financing in pesos at relatively low rates. What is likely is that there is financing in dollars, linked to the fact that a large part of agricultural inputs are denominated in dollars. The difficulty is that there is a very significant exchange rate difference, where probably if the producer has to return the same dollars within a year, he will have to return much more than double in pesos than today. But at least it will be linked to the value of its production”.

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