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ARGENTINA: Drought Threat Looms Again

BUENOS AIRES, Jan 26 2012 (IPS) - The low humidity in Argentina’s most agriculturally productive region has already caused a decline in grain yield – in particular corn and soybean – with ensuing losses for producers and the government.

So far, this austral summer’s drought has been less intense than the one that affected the 2008-2009 harvest. That drought, which was the worst in the last 100 years, caused a more than 37-percent drop in agricultural production and resulted in livestock losses.

However, and even with the respite afforded by the rains that finally fell in recent days, grain production, exports and revenue collection are expected to fall.

Cereals account for 38 percent of all foreign sales in Argentina, not counting agricultural processed goods.

“A record production of 111 million tonnes of grain had been projected for this year, but with the current lack of rainfall, estimates are down to 97 million for now,” analyst Gustavo López, of the consultancy firm Agritrend Argentina, told IPS.

López said that right now the “most compromised” grain was corn, with marked losses that could not be reversed even if heavy rains came, and he could not rule out the possibility that the 2008-2009 losses would be repeated.

Argentina is the second largest corn exporter in the world after the United States. In 2011, 23 million tonnes of corn were harvested, and 29 million were initially projected for this year, but López said a more accurate estimate now would be 22 million, at best.

The ministry of agriculture has already earmarked nearly 120 million dollars for an emergency fund to provide financial aid to small farmers who suffer the greatest losses.

Rural entrepreneurs say production has fallen as much as 30 percent in some areas, while in others the impact is much less or none at all. What is certain is that, contrary to what was projected, this year’s overall agricultural output will not exceed the 103 million tonnes of 2011.

“We don’t know what will happen. Projections change from one day to the next,” Socialist congressman Omar Barchetta, a leader of the Argentine Rural Federation that groups small and medium sized farmers, told IPS.

“I can’t say whether this drought will be milder or harsher than the last one. Right now things are looking complicated. I just spoke with a farmer from the southern region of Santa Fe (a northeastern province) who lost all his corn crops and 30 percent of his soybean crops,” Barchetta said.

More precisely, he said, the country’s most productive region – the midlands – is also the worst affected by the La Niña phenomenon, which alters rainfall patterns causing decreased rainfall in Argentina, Uruguay, parts of Paraguay, and Brazil.

The central province of Córdoba, where an agricultural emergency has been declared, is one of the hardest hit, as is most of Santa Fe, the country’s coastline region and the province of Buenos Aires in the east, with the exception of its southernmost part.

Also affected are the northern provinces of Chaco, Santiago del Estero, and Entre Ríos, La Pampa, to the west, and Río Negro, which marks the start of the southern region of Patagonia.

Precipitation has been low since November. Rain fell in some areas late that month, but it was too little and “too scattered”, López said.

“The rains were not abundant and did not have the extension needed,” he said.

According to the latest report from Bolsa de Cereales, a non-profit organisation that groups the sector’s chambers, the El Niño/Southern Oscillation (ENOS) phenomenon, which affects the south Pacific, and its counterpart, La Niña, cause increasingly frequent droughts due to global warming.

In 2008, the lack of precipitation began to be felt in November and rains were expected for mid-January 2009 but were delayed until March, when the damage was irreversible. The grain harvest plunged from 96 to 60 million tonnes.

Meteorologists say it is highly unlikely that the phenomenon will be as intense this year, but they cannot rule out the possibility of a harsh drought. Rainfall was expected for mid-January, but so far there have only been light and scattered rains.

Jan. 23 brought more abundant rain, improving the outlook for soybean crops, which will nonetheless have a lower output than expected, López said. As for corn, despite the rainfall, he was more cautious in his outlook.

The most critical crops are soybean and corn, which are at the sowing or harvest stage. Soybean occupies more than 50 percent of the cultivated surface. The 2011 soybean harvest yielded 50 million tonnes, of which 45 million were exported.

Fifty-two million tonnes were expected for this oilseed crop this year, but production could fall to 46 or 48 million tonnes, according to projections by the firm Agritrend. The decline could be worse if the current levels of precipitation continue. In the last drought, the harvest dropped to 31 million tonnes.

Average yield for corn in the last few years was 7,000 kilos per hectare, and now it is down to 6,000-6,600 kilos due to low humidity, López said.

If it rains the damage will be less than if the drought continues, as there are areas that are still not planted. In the last drought, corn yield was 5,600 kilos per hectare.

López forecasted that rural exports would decline by five billion dollars this year, as a result of this general drop in production brought on by unfavourable weather conditions and the slight fall in international prices.

As for government income, the main impact will come from a decrease in revenue from export taxes, which López estimates at 1.3 billion dollars less. Other analysts foresee an even greater contraction in revenue collection.

The consultancy firm Econviews, headed by economist Miguel Kiguel, projects a 15-percent drop in average prices in the sector and a five-percent reduction in the volume of production, bringing down export value by at least six billion dollars this year.

In 2011, rural exports amounted to 29.4 billion dollars, leaving well behind the effects of the 2008-2009 drought, when agricultural exports were down to 16.7 billion dollars.

Now, once again, the scarce humidity leaves Latin America’s third economy in an uncertain situation.