:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/WSVGY366DNDC5JLVSVFQGT6AXM.jpg "Due to effects of drought, agricultural exports could fall by more than trillion")
A work carried out by the economist of the Mediterranean Foundation, Juan-Manuel Garzonreflected the strong impact of various adverse weather conditions, such as drought, which could result in losses of more than $8 trillion in agricultural exports. For this reason, the specialist maintained that “this year the macroeconomics will not have the very good figures achieved by the agricultural sector in the last two years”.
Argentina is going through its worst drought in 60 years: what are the differences with the previous ones
Three consecutive years of water shortage have led to the disaster of the two main annual crops. The estimated losses, only partially offset by international prices
Argentina’s countryside has been facing various climatic adversities for months, such as drought, extreme heat and even early frosts in mid-summer. All this will have its negative effect on agricultural activity, the main contributor of foreign currency to the national economy. And in this context, all the variables associated with it, such as production, exports and contribution to income, have been adjusted downwards.
The work of Juan Manuel Garzón has raised three projection scenarios. In this regard, in the Basic scenario, total exports of the main agricultural products and industrial derivatives (cereals, oils, flour, beef and dairy products) would be around 37.8 billion USD in 2023, with a decrease of 8.4 billion USD compared to the previous year (-18%). But the said loss of foreign currency is compounded in the degraded reference scenario (tries to capture very recent adverse weather events, such as unusual frosts in regions that were doing relatively better than others) where it could reach $10.1 billion, a 22% drop from a year to year. And although it is still high, but a little lower in the improved base scenario (which hints at some positive, albeit unlikely, surprises in the coming weeks) with losses of $6.5 billion, 14% less than last year.
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Moreover, in terms of Export dutiesthe famous holdbacks, the Economist’s projections for this year on the collection of major agricultural commodities and their relevant industrial derivatives, could reach USD 7,600 million in the baseline scenario, estimating a drop of USD 2,050 million from the contribution estimated for this same group of products in 2022. Compared to the improved reference scenario, the decrease would be reduced to 1.5 billion USD, and would be accentuated in the degraded reference scenario which would reach 2.4 billion USD, i.e. a decrease 25% year-over-year on product group collection and 19% year-over-year decline on total tax collection.
“While final production results cannot yet be specified, there is no doubt that volumes will drop significantly from the previous cycle. So far this season, many factors have been added that threaten the production and average productivity of the crops, among which the sowing carried out outside the optimal windows, the unseeded areas, the lack of humidity in the profiles, the insufficient rains, unusual frosts, lower investments in technology and inputs, etc. said the economist.
The purchase and sale of fields also affected by the drought: in January the activity fell by almost 20%
According to the Argentine Chamber of Rural Real Estate, this has also affected the seasonality of the summer months and the country’s political and economic uncertainty.
And he added: “The 2023 macro will not find in the agricultural sector an extraordinary contributor to the economic life of the country, as was the case in the previous two years, in which very good figures were observed in terms of income, foreign exchange generation and contribution to the collection On the contrary, the agricultural sector will be hard hit this year, affected by a surprisingly adverse climate for production, which resulted not only in an unusual drought in areas with normal rainfall good, but also by very atypical situations in terms of temperatures, with extreme, very high values, followed a few days later by very low records”.
In the baseline scenario, we worked with projections of soybean production of 34.5 million tonnes, i.e. a downward adjustment of 18% compared to the previous campaign, and with a commercial corn production 42.6 million tonnes, 16% less than in the previous cycle. In addition, in the case of cereals, the base scenario presents export estimates of 30.5 million tons, the degraded base scenario with shipments to the external market of 28 million tons and the improved base scenario of 32.6 million tons.
In the case of soybeans, Garzón said that there are several relevant variables, where imports are assumed to be a flow of 6 million tons in all scenarios, presenting, as GlobeLiveMedia reported yesterday, a significant increase compared to to 2022, crushing with processing which could reach 36 million tonnes in the reference scenario, soybean exports at 1.5 million tonnes in the reference scenario and ending stocks, which are defined around 2.0 million tons anyway.
Moreover, in the three scenarios presented, the wheat and barley they were included with a volume of 11.5 million tons, with an exportable balance of 5.1 million tons, and 4 million tons and with an exportable balance of 2.8 million, respectively. Products such as sunflower, sorghum, groundnuts, beef, dairy products and balanced foods have also been included.
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