Uruguayan agriculture was one of the first to give warning signs about the effects that the depreciation of the dollar would have on the sector’s competitiveness last December.
So, with a loss of 10.65% of the value of the currency in the year, the field did not face the impact of the historical drought that, currently, has jeopardized the soybean and corn harvest, and also affected the cattle market.
Although estimates show that only in the second half of the year will it be possible to accurately quantify the ravages of the drought in the Uruguayan economy, there are data that are clarifying a bleak outlook for the sector that was the engine of record exports registered by the country in 2022 (13,356 million dollars).
As an example, the soybean harvest hardly exceeds one million tons, according to agricultural businessmen consulted by Ámbito. Uruguay has been planting just over one million hectares, with an expected average yield (in a normal year) of between 2.5 and 2.8 tons per hectare, so that an expected “normal” harvest would be 3 million tons. . This year, not even a third of that volume will be reached.
Meanwhile, farm production costs per hectare were between 450 and 500 dollars, according to Calmer data.
In this context, the claims for the depreciation of the dollar, which accumulates a drop of 3.66% in its price so far this year, were put back on the table.
What value does it claim?
the field for the dollar?
The agro-export complex issued a harsh statement last December, demanding that the Central Bank of Uruguay (BCU) end the contractive interest rate policy, which is the way in which the government has decided to address the problem of high inflation (7, 55% annually in February). At that time, the sector placed the exchange rate arrears at 12%.
Since then, different representatives of agricultural entities have held meetings with both representatives of the BCU and the Executive of Luis Lacalle Pou to raise the blow to the competitiveness of the sector that brings with it the appreciation of the peso.
Gonzalo Valdés, president of the Rural Association of Uruguay (ARU), updated the value of the exchange rate arrears by 25% in a recent interview with La Mañana.
“At the producer level, the drop in purchasing power has been very large. You have to calculate that deviation of 25% delay plus inflation. With that number, the purchasing power of those of us who have to sell dollars has been greatly reduced, ”he explained.
Thus, a desirable price of the dollar for agriculture would be around 48.31 pesos, based on the closing of the currency on Friday at 38.648 pesos.
The figure far exceeds the value estimated by the market in the latest BCU Economic Expectations Survey, where the agents consulted projected a dollar at 41.50 pesos at the end of the year.
Instead, it is close to that calculated by The Economist based on the Big Mac Index, which suggested that Uruguay should have the dollar at 50 pesos.
Source: Ambito
