In the midst of the rise of the blue dollar, there is no good news from agriculture, the main foreign exchange generating sector. Field exports would fall by just over $14 trillion by 2023 due to the severe drought which is passing through most of the productive regions of the country.
“According to the latest foreign exchange balance data released by the Central Bank, the single free foreign exchange market had revenues of $53,092 million in the past 12 months, where the agro-industrial sector contributed 77% of the total. In this way, In the face of a complex landscape that records a decline in agricultural production and exports, it would mean a lower supply of currencies“, they warned in a report made jointly by the Buenos Aires Grain Exchange and the INAI Foundation.
According to the Drought Information System for Southern South America (SISS), as of January 5, 2023, 54.48% of the country experiences droughts of varying degrees: 11.57% suffer from an exceptional drought; 7.43% an extreme drought; 14.39%, severe; 22.19%, moderate; and 8.9% are abnormally dry.
Since last September, the production levels of barley and wheat have suffered cuts of 1.2 and 5.1 million tons respectively, closing with a production of 3.8 and 12.4 million tons.
Depending on the job, the absence of rainfall throughout the campaign, together with repeated frosts at critical moments for the definition of yields, they have caused losses and losses of arable area.
The absence of precipitation also conditioned the dynamics of sowing summer crops. The report ensured that the limited water supply at the beginning of October held back the sowing progress, leaving the area outside the 2022/2023 campaign.
Soybean planting covers 81.8 percent of projected 16.7 million hectares, lagging year-over-year by 11.7 percentage points (pp) and lagging planting progress by 11 pp over the past five campaigns.
In parallel, the incorporation of maize presents a delay of 14.6 pp compared to the average trend of the last five campaigns, covering 69.9% of the 7.3 million hectares planned for the 2022/23 campaign, being late maize and second occupancy the hardest hit plantations due to lack of surface moisture in the center of the agricultural area.
Production
Continuing with the work, covering two possible scenarios in relation to what was foreseen at first. a significant impact on production is expected.
Taking the most dramatic scenario, wheat production could drop to 93 million tons when counting the top 5 grains, 33 million tons less (26%) compared to the previous cycle. The soybean harvest would drop to 35.5 million tons, corn to 37.8 million tons and sunflower to 3.5 million tons. The wheat and barley harvest had already ended with bad results. 12.4 million tons and 3.8 million tons, respectively.
exports
So, given these meager volumes, income for shipments would decrease by US$ 14,115 million (33%) compared to US$43,363 million in 2022.
Dollar income from soybean exports would decrease by US$18,670 million (25%) and in the case of corn by approximately US$6,120 million (41%).
Less collection
Tax collection would also experience significant declines, down by up to 27% from last season, or about $3.6 billion less.
The main reason for the reduction in tax collection is export duties which, compared to the 21/22 campaign, would have a decrease of US$ 3,328 million if scenario A or B were implemented.
Gross Domestic Product
Contextualizing the size of these losses and considering the latest IMF projections on Argentina’s GDP for the year 2023 (they would be $643,797 million), the decline would have a negative impact equal to 1.8% of GDP. “The soybean value chain would have the largest decline in its contribution to the economy,” they added.
Source: Clarin
