Argentine Farmers Hopeful for 2024 Harvest After Worst Drought

# Argentine Agriculture Hopes for a Bountiful 2024 Harvest After Worst Drought in History

Argentina’s agricultural sector has faced hard times due to historical drought conditions. However, with the onset of favorable weather patterns, there is renewed optimism about the 2024 harvest. This article explores the implications of this anticipated agricultural rebound for the soybean crop, which comprises a significant portion of Argentina’s exports and GDP.

## The Silver Lining of Recent Rains

The Argentine countryside has seen a glimmer of hope with recent climatic developments. In early 2023, a devastating drought had a profound economic impact, costing the agro-export complex over $20 billion. Fortunately, the rains that fell across the central region of the country, known for its fertile lands, are infusing much-needed optimism for an economy striving to bolster its foreign currency reserves amid one of the most challenging crises in the last two decades.

A substantial recovery is on the horizon for the soybean crop, which occupies the largest cultivation area in the nation, though this change in fortune will also affect corn production. Yet, for wheat, a crop that contributes significantly to Argentina’s exports and makes up 18% of its Gross Domestic Product (GDP), the rainfall arrived too late, though it does not entirely diminish the potential for an overall sector rebound.

## From Soil to Central Bank

“The soybean planting will be the most substantial in the past four years. Last year, we lost over a million hectares. With the rains, we could see harvests exceeding 40 million tonnes, a stark contrast to the 20 million tonnes of the previous year. These are numbers full of promise,” stated Cristian Russo, lead of the Strategic Guide for Agriculture at the Rosario Board of Trade.

While production is quantified in tonnes, its valuation is in U.S. dollars. Given that the Argentine Central Bank’s indicators are in the red, with inadequate net reserves to meet potential debt obligations, reviving the most significant foreign currency-producing sector is crucial.

Chief Economist of the Sociedad Rural Argentina (SRA), Ezequiel de Freijo, puts this into perspective. “The mere absence of a drought is pivotal. Last year, the deficit was near $20 billion. If conditions improve, projections suggest approximately $36.5 billion: a monumental leap that we must harness. In essence, the tonnes are recovering, and export volumes should align with historical levels,” he told Sputnik.

## A Balancing Act: Soy and Corn

The apparent climate benefits are primarily due to soy, Argentina’s major export crop with key markets like China. However, inherent to cultivation is the cost disparity; financially strained farmers may opt for soy, which is cheaper to produce than corn—potentially by 50%. As a result, a larger soy harvest is expected, aiding in the reversal of the dire situation from the onset of 2023.

The Rosario Board of Trade authorities note that drought conditions restricted wheat planting in the core zone, leading to a reduced corn planting surface by 400,000 hectares. Nevertheless, these lands are now being used for soy, thereby expanding the initial 17 million hectares allocated for the oilseed to nearly 17.5 million.

This development, termed the “gross harvest,” starting in April and peaking around May and June, has the greatest significance and fuels substantial improvement expectations. “Soy is closely tied to foreign currency earnings, thus becoming an essential economic indicator. Therefore, the recent rainfall has heightened anticipation for a solid harvest campaign,” Russo explained.

Despite the positives, the situation isn’t as rosy for wheat, which has been severely affected by climate adversities, resulting in lower harvest projections. Nevertheless, as De Freijo highlights, “this year’s harvest was far worse, akin to Egypt’s seven plagues: frosts, drought, and storms. Despite some lingering impacts, a major turnaround is anticipated in the upcoming gross harvest, which is of the utmost significance.”

## The Road Ahead for Argentina’s Agriculture

The relief in returning to typical outcomes, barring the drought years, doesn’t limit the pursuit of expanding the sector’s prospects. “Production has been stagnant at 130 million tonnes for about five campaigns. We must break this inertia to enhance sector growth,” De Freijo asserts.

In challenging climates and financial circumstances, the agricultural field has managed to quickly bounce back, making it crucial to recognize such recovery and act responsibly.

The latest news from Argentina demonstrates a resilient agricultural sector preparing to reclaim its standing following extreme adversity. Weather conditions now place the country’s 2024 harvest under a hopeful spotlight, with the potential to lead to a significant economic recovery.

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