March 11, 2023

 

Argentina's historic drought pummels farmers and the economy

 

A historic drought in Argentina is badly affecting crops and worsening the country's economic crisis, pummelling farmers across the Pampas, deepening concerns of default, and putting at risk targets agreed with the International Monetary Fund (IMF), Yahoo! News reported.

 

Argentina, which ranks third in corn exports and first in processed soy exports globally, is experiencing its worst drought in more than 60 years, which has repeatedly caused forecasts for the soybean and corn harvests to be drastically reduced.

 

The country's Rosario exchange slashed its soy production outlook to 27 million tonnes, the lowest since the turn of the century when much less of the crop was planted.

 

Julio Calzada, head of economic research at the Rosario exchange, said the country is facing an unprecedented climatic event, adding that farmers will suffer losses of US$14 billion and 50 million tonnes less of grain production across soy, corn, and wheat.

 

For Argentina, the drought is a devastating blow. It happens as the nation prepares for crucial general elections in October, is battling 99% inflation, and faces a mountain of domestic and foreign debt repayments to bondholders and the IMF.

 

Plans to replenish depleted foreign currency reserves are stalling due to the country's primary export being grains, which has prompted discussions with the IMF to relax reserve accumulation goals for the year. Analysts have also cut the GDP outlook

 

Luis Zubizarreta, head of the commercial ports chamber and soybean industry body, described the situation as "dramatic". It affects Argentina's entire economic situation as well as the flow of foreign currency at a crucial time.

 

He said the flow of grains at ports is at historically low levels because there is no merchandise.

 

In some areas, the drought affecting Argentine farmers dates back to May 2022 and has been made worse by high temperatures linked to climate change. In the 2022/23 season, the nation has experienced at least eight heat waves.

 

If there are no rains, Argentina's soy and corn forecasts may decline even further, according to the grains exchanges. The soy forecast on the Rosario exchange has already dropped to its lowest level since the 1999/00 growing season, and the anticipated yield is at its lowest level since 1996/97.

 

-      Yahoo! News