Despite the fact that expectations are already set on the next agricultural season, in which a better behavior of the climate is expected due to the Niño phenomenon, the consequences of the drought persist and allow us to draw some conclusions.
A few days ago, the stock markets and cereals cut wheat sowing projections. Of the 6.3 million hectares that were calculated at the beginning of the campaign, three weeks ago it was adjusted to 6.1 million hectares and a week ago, it was reduced to 6 million hectares, according to the Buenos Aires Grain Exchange. Aires. In turn, the Rosario Stock Exchange (BCR) calculated that wheat planting would fall between 15 and 23% in the core zone.. These numbers mean that in these regions, and also in the west of Buenos Aires, among others, the possibility of having an income at the end of the year is fading after the strong blow of the 22/23 campaign.. In the traditional wheat region, center and south of Buenos Aires, the picture is different and, in some cases, the opposite: there is already talk of excess water.
The numbers that the drought leaves are very hard. A BCR report indicated that the Unharvested Area (SNC) of the three main crops nationwide reached 6.5 million hectares. “In our country, an area similar to half the surface of the province of Santa Fe will stop harvesting,” said the president of the BCR, Miguel Simeoni.
“Most (of the SNC) was contributed by soybeans (3.6 million hectares), followed by corn (1.9 million hectares) and wheat (916,000 hectares)”the report added.
The paper analyzes the impact of the SNC by province. “The one that contributed the most to the global number was the province of Buenos Aires, whose SNC amounted to 2,218,500 hectares, a figure greater than the area of the largest party (Patagones, which has 13,600 square kilometers, that is, 1,360,000 hectares) . The podium is completed by Córdoba (1.6 million hectares) and Santa Fe (1.4 million hectares)”, he explained.
The weather, like the markets, is a classic variable with which the agricultural business has to deal. More than regrets, there are tools and strategies to prepare for eventual extreme contingencies.
It is true that the drought of this last campaign exceeded the most pessimistic projections, but, even so, in agricultural activity, it is known, weather is a risk factor that each one faces in the best way they can. In fact, agronomic knowledge, from management to technological innovation, has been providing answers to this challenge. Late planting of corn, genetic modification of wheat and technologies that allow us to combat weeds in soybean are, among others, some of these examples.
Howeverpolitical and economic factors are much more difficult to deal with. And they are the ones who are out of step with the challenges posed by the climate and the markets. In the case of drought, for example, the Government takes it as an excuse. He raises it when he is going to ask the International Monetary Fund (IMF) for help, but he does little or nothing when the protagonists of the activity themselves anticipate the problem and warn him that it is necessary to take urgent measures, not mere palliatives.
Last March, when it was already known that the drought was reaching proportions never seen before, there were several who proposed a reduction to zero of export duties for the current campaign. Faced with the eventuality that a large amount of soybean surface remained unharvested because the harvesting costs exceeded the meager yield to be obtained, it was requested that the withholdings be eliminated. Of the 3.6 million hectares planted with soybeans that remained unharvested, there would have been something that without the withholdings at 33% could have been raised and generated income for the chain that, ultimately, belongs to the rural communities. Little is better than nothing.
However, the Government preferred the shortcut path. Urged by the Central Bank’s reserves in the red, he once again offered a differential exchange rate for soybeans. This critical scenario coexists with an unusual exchange gap and the control of the grain trade with the euphemism of “equilibrium volumes”, which, strictly speaking, are export quotas.
The knot “withholdings, differential exchange rates and control over exports” should be unleashed by the next government if you want to recover the economy and start thinking about a development platform for the medium and long term.