The weather did not accompany the agricultural sector throughout the country. With the presence of the La Niña phenomenon for the third consecutive year, both the fine and coarse harvests felt the full impact of the lack of rainfall and the drought. According to the estimates of the Córdoba Stock Exchange, between 21 and 27 billion dollars will be lost compared to the previous agricultural season. This figure is equivalent to 4% of GDP.
The economic impact
After reaching a record of almost 55 billion dollars in the 2021/22 campaign, the report projects the value of the harvest of the 3 main crops (wheat, corn and soybeans) between US$27,000 and US$33,000 million in the 2022/23 campaign. This means that it will fall between 40% and 50% compared to the previous year.
Soybeans will be the most affected. We estimate that its crop will lose more than 45% of its value, which represents 13 to 15.5 billion dollars less than 2022.
In the case of corn, the projected loss in hard currency exceeds 35% year-on-year, equivalent to 6.5 billion dollars. However, it could fall as much as 3 billion dollars more.
For wheat, our estimates indicate that it lost 2 billion dollars nationally, which means 29% less compared to the 2021/2022 campaign.
The productive impact
The ranges of our estimates are explained by the lack of consensus on the definitive productive impact of the climate on the agricultural sector.
According to the first preliminary estimates published last week by the Ministry of Agriculture, Livestock and Fisheries of the Nation, the corn harvest would fall by 27% and the soybean crop by 37%.
These projections appear optimistic compared to those made by the Rosario Stock Exchange, which indicate that corn production would fall 46% and soybean production 48%.
What happened with wheat in the fine harvest leads us to think that the most probable scenario is close to that projected by the most pessimistic estimates.
After marking its best historical campaign in the country, the cereal lost almost 10 million tons according to final estimates (43% less than 2021/2022). It is worth mentioning that not everything was impacted by the drought: the area implemented for the cereal had already fallen by 12.5%.
Criticism of the economic situation
The Córdoba Stock Exchange rejected that the drought is “to blame for the crisis.” ” The Central Bank is not running out of genuine reserves due to the impact of the drought. Three years ago it had approximately 10 billion dollars of its own reserves. Additionally, the agricultural sector generated almost 40 billion dollars more than usual between 2020 and 2022. Despite this, for almost a year the net reserves have been on the verge of going negative, subsisting on the basis of IMF loans and measures such as the “soybean dollar”, short-term and counterproductive, since they aggravate the marked imbalances in the Argentine economy,” he concluded.
Source: Ambito
