{"id":50050512,"date":"2022-01-24T18:51:04","date_gmt":"2022-01-24T18:51:04","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=50512"},"modified":"2023-04-13T20:49:53","modified_gmt":"2023-04-13T19:49:53","slug":"50488-drought-south-america-soy-maize-economy","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/water\/50488-drought-south-america-soy-maize-economy\/","title":{"rendered":"Heatwave and drought hit South America\u2019s crops and economy"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Brazil, Argentina and Paraguay, the three major agricultural producers in South America, are currently experiencing a prolonged period of drought and low water levels in their main rivers. This is severely impacting harvests, as well as river transport of important summer crops, with maize and soybeans the main casualties.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Although conditions may yet improve, the grain harvests of 2021 and 2022 could result in losses that will impact the economies of three countries, though experts say the potential magnitude is still difficult to foresee.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For <\/span><a href=\"http:\/\/stage.dialogochino.net\/en\/agriculture\/44411-is-argentinas-soy-boom-over\/\"><span style=\"font-weight: 400;\">soy<\/span><\/a><span style=\"font-weight: 400;\">, South America\u2019s star grain, projections for possible losses caused by adverse weather in the countries vary. The most conservative forecasts come from the <\/span><a href=\"https:\/\/www.usda.gov\/oce\/commodity\/wasde\/wasde0122.pdf\"><span style=\"font-weight: 400;\">United States Department of Agriculture<\/span><\/a><span style=\"font-weight: 400;\">, which anticipates a 9.5 million tonne shortfall, while others forecast more acute losses, such as the Brazilian agency AgRural, which <\/span><a href=\"https:\/\/agrural.com.br\/america-do-sul-podera-ter-quebra-de-20-milhoes-de-toneladas-de-soja-folha-de-sp\/\"><span style=\"font-weight: 400;\">estimates<\/span><\/a><span style=\"font-weight: 400;\"> a 20 million tonne reduction in production across the three countries.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As for maize, it will be difficult for Argentina and Brazil to reach the output that they expected even a few weeks ago, according to a <\/span><a href=\"http:\/\/www.salvadordistefano.com.ar\/contentFront\/informe-de-economia-y-negocios-1\/clima-proyecciones-y-precios-6359.html?skin=&amp;currentPage=0&amp;currentActionPager=0&amp;orderBy=&amp;orderMode=DESC&amp;force_publish=\"><span style=\"font-weight: 400;\">report<\/span><\/a><span style=\"font-weight: 400;\"> by agribusiness consultant Marianela de Emilio. \u201cThe weather continues to put South America\u2019s production projections on a tightrope, with planting area adjustments and potential yields down,\u201d she explained.<\/span><\/p>\n<div class='block--pullout-stat block--pullout-stat--float cd-shortcode--factbox'>\n                <p class='block--pullout-stat__title'>20,000,000<\/p>\n                <div class='block--pullout-stat__content'>\n                    <br \/>\ntonnes of soy will be lost in the 2021-2 harvest across Brazil, Argentina and Paraguay, according to Brazilian agency AgRural.<br \/>\n\n                <\/div>\n            <\/div>\n<p><span style=\"font-weight: 400;\">Weather projections, at least until the end of March or early April, are not too encouraging for the entire region, as the La Ni\u00f1a climate pattern continues to impact South American weather, and contributes to drought in the three countries.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cAs long as La Ni\u00f1a remains active, these patterns will continue, and projections are not optimistic for the short term, as we are still under the influence of a circulation pattern that inhibits rainfall in the Paran\u00e1 basin area,\u201d said Cindy Fern\u00e1ndez of Argentina\u2019s National Meteorological Service (SMN).\u00a0<\/span><\/p>\n<h2>A trio in trouble<\/h2>\n<p><span style=\"font-weight: 400;\">Brazil is the world\u2019s <\/span><a href=\"http:\/\/www.worldagriculturalproduction.com\/crops\/soybean.aspx\"><span style=\"font-weight: 400;\">leading producer and exporter of soybeans<\/span><\/a><span style=\"font-weight: 400;\"> and the world\u2019s <\/span><a href=\"https:\/\/www.atlasbig.com\/en-au\/countries-by-corn-production\"><span style=\"font-weight: 400;\">third largest<\/span><\/a><span style=\"font-weight: 400;\"> producer of maize. Both grain crops are suffering this season due to the lack of rain in the country\u2019s southern states, and will see smaller harvests than were expected a month ago.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Forecasts already show what has been lost. Due to the drought, Brazil\u2019s state-owned National Supply Company (Conab), which oversees agricultural planning, cut crop <\/span><a href=\"https:\/\/www.conab.gov.br\/ultimas-noticias\/4464-soja-e-trigo-garantem-aumento-na-producao-nacional-de-graos\"><span style=\"font-weight: 400;\">estimates<\/span><\/a><span style=\"font-weight: 400;\"> for coarse grains that it had made in December. For soybeans, these were reduced from 142.8 million to 140.5 million tonnes, while for maize, the authority expects an output of 112.9 million instead of 117.2 million tonnes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In Argentina, a lack of rainfall in the central-eastern region during the crop cycle forced estimates for the maize harvest to be <\/span><a href=\"https:\/\/www.bcr.com.ar\/es\/mercados\/gea\/estimaciones-nacionales-de-produccion\/estimaciones\/la-sequia-recorta-8-mt-en-maiz-y\"><span style=\"font-weight: 400;\">cut by 8 million tonnes<\/span><\/a><span style=\"font-weight: 400;\">, from 56 million to 48 million tonnes, and soybeans from 45 million to 40 million tonnes. A heat wave hit the most fertile part of the country in the first weeks of January.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Meanwhile in Paraguay, the situation is no better, according to the country\u2019s agriculture minister, Mois\u00e9s Bertoni. \u201cWe were doing well until the last weeks of November, but December was very dry and in January very high temperatures arrived, which had an impact on soya, which is Paraguay\u2019s main export crop,\u201d he said.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Rosario Stock Exchange (BCR) estimates that the drought will cut Paraguay\u2019s expected soya production <\/span><a href=\"https:\/\/www.ambito.com\/economia\/soja\/efecto-sequia-podrian-perderse-ingresos-al-menos-us4550-millones-n5350945\"><span style=\"font-weight: 400;\">by 30%<\/span><\/a><span style=\"font-weight: 400;\">, which, along with a projected 5 million tonne shortfall in the maize harvest, could mean a loss of income of around US$4.5 billion for the nation. \u201cMany producers have opted to feed the [damaged] maize to cattle, although we are still waiting for conditions to improve,\u201d Bertoni added.\u00a0<\/span><\/p>\n<h2>An unusual climate<\/h2>\n<p><span style=\"font-weight: 400;\">This season\u2019s difficulties aren\u2019t entirely new, however. Paraguay, southern Brazil and northeastern Argentina cover a vast region of South America crossed by rivers that make up the R\u00edo de La Plata Basin, and have been experiencing a severe water deficit for almost three years, with two consecutive summers under the influence of La Ni\u00f1a.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to Fern\u00e1ndez of the SMN, it has been more than 20 years since normal or above-normal rainfall has been recorded in southern Brazil, with some exceptions. This means that the region has been suffering from a long-standing water deficit. In Argentina, the northeastern Litoral region has recorded below-normal rainfall for the last two years, particularly during the summer.<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">This above-average intensity and duration is partly attributable to climate change, and the likelihood for the future is that these events will recur more frequently<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">According to Paraguayan agronomist Luis Recalde, while this year\u2019s event is not a completely unknown or new phenomenon, it is unusual in its magnitude and duration. \u201cThis above-average intensity and duration is partly attributable to climate change, and the likelihood for the future is that these events will recur more frequently,\u201d he said.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For Recalde, the problems of the drought go beyond production and are socio-environmental. These range from losses in agricultural and livestock productivity \u201cthat will have lasting effects on the prices of basic food basket products\u201d to the amplification of forest fires, which generate \u201cgreat loss of biodiversity and damage to health in terms of air quality\u201d.<\/span><\/p>\n<h2>River levels remain low<\/h2>\n<p><span style=\"font-weight: 400;\">The rivers that make up the R\u00edo de La Plata basin, which covers an area of over <\/span><a href=\"https:\/\/cicplata.org\/es\/una-cuenca-cinco-paises\/#:~:text=La%20Cuenca%20del%20Plata,-Caracter%C3%ADsticas&amp;text=Su%20importancia%20radica%20tambi%C3%A9n%20en,%2C%20Brasil%2C%20Paraguay%20y%20Uruguay.\"><span style=\"font-weight: 400;\">3 million km2<\/span><\/a><span style=\"font-weight: 400;\">, are experiencing extraordinarily low water levels, which began in the southern winter of 2019 and are still persisting. This phenomenon has various consequences for the human use of the rivers and their productive functions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cThe impacts of the lack of flow in the rivers are enormous and very diverse, but the most obvious for people are the shortage of water for consumption, and the rise in the prices of electricity, goods and fuels that are moved through the rivers or the energy generated in dams,\u201d said Recalde.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For Paraguay, which transports part of its grain production by barge to the agro-export ports of Rosario in Argentina, the river\u2019s low water level has become a problem for the state. \u201cThe barges go without a full load and that means a double cost for exports,\u201d said Bertoni, the agriculture minister.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Argentina\u2019s agro-industrial sector is also suffering millions of dollars in losses due to the Paran\u00e1 river\u2019s low water level. According to the <\/span><a href=\"https:\/\/www.bcr.com.ar\/es\/mercados\/investigacion-y-desarrollo\/informativo-semanal\/noticias-informativo-semanal\/por-la-bajante\"><span style=\"font-weight: 400;\">Rosario Stock Exchange<\/span><\/a><span style=\"font-weight: 400;\">, in 2021 alone, some US$620 million were lost as ships were unable to fill their cargo to capacity due to drought-related production problems.<\/span><\/p>\n<h2>Economic impacts of drought in South America<\/h2>\n<p><span style=\"font-weight: 400;\">The current drought has and will have severe economic impacts. The impact on the Argentine economy will be at least US$4.8 billion \u2013 equivalent to 1% of the country\u2019s GDP \u2013 according to a <\/span><a href=\"https:\/\/www.bcr.com.ar\/es\/sobre-bcr\/medios\/noticias\/la-fecha-la-sequia-202122-les-costara-los-productores-agropecuarios-us\"><span style=\"font-weight: 400;\">report<\/span><\/a><span style=\"font-weight: 400;\"> from the Rosario Stock Exchange.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cEven with the recovery of prices, the loss of net income for the producing sector already amounts to US$2.93 billion, which will result in less freight, less financial and intermediary services and less consumption,\u201d the exchange\u2019s report explains.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But the weather does not affect everyone equally. The stock exchange argued that the drought affects small and medium-sized producers in particular, many of them <\/span><a href=\"http:\/\/stage.dialogochino.net\/en\/agriculture\/39089-argentinas-land-laws-stifle-sustainable-agriculture-soy\/\"><span style=\"font-weight: 400;\">tenant farmers<\/span><\/a><span style=\"font-weight: 400;\"> who no longer have their own fields. In rented fields, the result of the current agricultural campaign is already negative.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cThere is a good chance that with the current costs, the producers who continue to pursue these activities will go back to making more soybeans and return to monoculture,\u201d warned the BCR.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Carlos Achetoni, the president of the Federaci\u00f3n Agraria Argentina, which represents medium and small producers across the country, said many are already in debt. \u201cA bad harvest leaves many in a situation of bankruptcy, and this could force more producers out of the production circuit if help does not come from the state,\u201d he said.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In Paraguay, according to Bertoni, agriculture accounts for 25% of GDP directly, a percentage that rises to 50% if one considers the activity it generates indirectly through services such as transport or agricultural machinery. \u201cThe impact of the drought in Paraguay is brutal, and even more so if we talk about soya, which accounts for 40% of our total exports,\u201d he explained.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In Brazil, last year alone, the drought and the energy crisis it generated caused losses of some US$1.464 billion, according to the <\/span><a href=\"https:\/\/www.efeverde.com\/noticias\/sequia-reducira-pib-brasileno-011-este-ano\/#:~:text=%2D%20EFE.,por%20la%20falta%20de%20lluvias\"><span style=\"font-weight: 400;\">National Confederation of Industry<\/span><\/a><span style=\"font-weight: 400;\"> (CNI).<\/span><\/p>\n<h2>Forecasts offer no relief<\/h2>\n<p><span style=\"font-weight: 400;\">The outlook for weather across South America\u2019s agricultural region does not look promising, according to the January\u2013March 2022 quarterly <\/span><a href=\"https:\/\/www.smn.gob.ar\/noticias\/pron%C3%B3stico-clim%C3%A1tico-para-el-primer-trimestre-del-2022\"><span style=\"font-weight: 400;\">forecast<\/span><\/a><span style=\"font-weight: 400;\"> from Argentina\u2019s meteorological service.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cThere is an increased likelihood of warmer than usual average temperatures across much of the country. The regions with the highest probabilities in this category are the south of the Litoral, centre-south of [the provinces of] Santa Fe, C\u00f3rdoba, Buenos Aires and La Pampa,\u201d the report states. It is not good reading for these provinces, which are Argentina\u2019s agricultural heartlands.<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">A bad harvest leaves many in a situation of bankruptcy, and this could force more producers out of the production circuit if help does not come from the state<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">As for rainfall, the forecast shows that the Litoral is almost 50% more likely to see below-normal rainfall for this quarter of the year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These conditions, said meteorological expert Cindy Fernandez, will extend across the whole of southern South America, including the large agricultural production area shared by southern Brazil, Paraguay and northeastern Argentina: \u201cThe area shares weather patterns, and is under the influence of La Ni\u00f1a for the second consecutive summer. The projections are not good, at least until the end of the summer.\u201d<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Southern Brazil, Paraguay and northeastern Argentina are experiencing a severe drought that is affecting soybean and maize production<\/p>\n","protected":false},"author":50000026,"featured_media":50050503,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[761,50039903],"tags":[519,543,50040317,595,607],"hashtags":[],"country":[50000020,50000021,50002600],"class_list":["post-50050512","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-climate","category-water","tag-climate-impacts","tag-extreme-weather","tag-farming","tag-soy","tag-water-scarcity","country-argentina","country-brazil","country-paraguay"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO 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