The prolonged drought wreaked havoc in the Argentine countryside / Web
Although rainfall was recorded in the last few hours, which was a relief for the producers, the drought continues to be the biggest problem that the field has been going through for several months now. The sector contributes 7 out of every 10 dollars that enter the country, directly and indirectly employs 3.7 million people and in 2022 it exported more than US$55,000 million, a historical record. Any situation that affects it will hit squarely in the functioning of the Argentine economy.
It is the third consecutive year of the La Niña climatic phenomenon, which in our country causes less than average rainfall. In the last semester of 2022, the lack of precipitation worsened, causing severe damage to the main productions. For example, the current season’s wheat harvest ended at 12.4 million tons, 10 million tons less than in the previous cycle, according to the Buenos Aires Grain Exchange (BCBA).
But the rains of the last hours were a relief in the face of the drought that affects agricultural production, with accumulated amounts that exceeded 70 millimeters in some sectors of the province of Córdoba, where it rained the most. In the south of the agricultural area of that province, as for example in Bengolea, it rained 78 mm, in Viamonte, 75 mm, while Villa Huidobro and Pueblo Italiano registered 74 mm, Marcos Juárez, 71 mm and General Levalle, 70 mm. In San Pedro and Arroyo Dulce, province of Buenos Aires, the rain gauge marked 65 mm and in Funes, Santa Fe, 54 mm.
It is the most regionalized rain since the beginning of spring, because it covered the entire Core Zone, the most decisive for the volumes of the Argentine harvest. Rainy events are expected to continue in that region in the coming days. According to the current extended forecast, rainfall would be recorded again throughout the week in the Mediterranean province.
In the midst of one of the most severe and destructive droughts in recent decades, the rains that were recorded in the province of Santa Fe and its surroundings brought long-awaited relief to the countryside. Although a specific climatic event does not have the capacity to reverse months of water deficit.
The drought brings with it a lower level of activity in the economy since it entails a decrease in the production of goods such as grains, meat, milk, fruits, etc. and taking into account that it is the main sector of the Argentine economy, its “direct” impact on activity is magnified.
According to the Buenos Aires Grain Exchange, only the contribution of the five main granary complexes could fall between 21% and 30% compared to the previous season, and could represent a drop of US$15,743 million in the worst case analyzed by the entity, equivalent to 1.8% of the estimated GDP. But for economist David Miazzo, from the Argentine Agricultural Development Foundation (FADA), the impact could reach between two and three points of GDP, and the economy “enters recession.”
For this reason, the Government and the 4 entities of the liaison table (CRA, FAA, SRA and Coninagro) began to agree this week on a series of tax and credit measures that will aim to alleviate the crisis that many agricultural producers are going through due to the drought. The intention of Minister Sergio Massa is that the measures are ready to be announced next Wednesday, February 1.
