Economic losses from drought in Argentina estimated at 3% of GDP in 2023

Losses to Argentina’s agricultural sector due to the intense drought in the country are estimated at US$14.14 billion.

The total cost to the national economic activity already amounts to three points of the potential gross domestic product (GDP) estimated by the International Monetary Fund for the country in 2023, reported Thursday by the Rosario Stock Exchange (BCR).

The stock exchange entity, one of the main referents of the grain market in the South American country, made another estimate of a cut in soybean, wheat, and corn production, foreseeing a drop of 50 million tonnes.

“Between what was projected at the time of sowing and the estimates to date, 50 million tons of production were lost, only in wheat, soybean, and corn.

The producer sector’s losses amount to US$14.14 billion. This is equivalent to the total cost of sowing the next 2023/24 harvest for the agricultural producer,” stated the BCR.

However, the entity revealed that the total losses of the national economic activity, considering freight, labor, and financial services, already amount to US$19 billion, equivalent to three points of the estimated GDP for 2023.

“There are no words to describe the impact of a campaign marked by all historical weather records: rain deficit for the third consecutive year in the summer, persistent heat waves until well into March, and agronomic frosts as late as October in 2022 and as early as February in 2023,” reflected the BCR statement.

Soybean, wheat, and corn account for approximately 87% of grain production and 43% of Argentina’s exports if by-products such as soybean oil and soybean meal are considered.

In that sense, a foreign exchange income of US$21.74 billion is expected for this cycle, US$13.95 billion less than the income obtained during the 2021/22 campaign.

BCR’s initial production estimates were 54 million tonnes (Mt) of corn, 49 Mt of soybeans, and 19 Mt of wheat for this year’s campaign.

Due to the severe drought, projections are now cut to 35 Mt for corn, 27 Mt for soybeans, and 11.5 Mt for wheat.

With information from Xinhua