In Argentina's drought-hit fields, billion dollar losses and farmers
going under
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[February 16, 2023]
By Lucila Sigal
CIGUENA/ROSARIO, Argentina (Reuters) - In the Argentine town of Ciguena,
rancher Andrés Betiger is fighting to keep his farm from going under
amid the South American country's worst drought in sixty years, which
has pummeled soy, corn and wheat crops and dented cattle herds.
To get water, Betiger travels 52 kilometers (32 miles) with a tank and
rickety tractor that often breaks down, a reflection of how the arid
weather since last year has weighed on farmers, who have delay planting
and even abandoned crops.
"Things are bad, we don't have much, we don't have margins to stop
things for four or five days. We are practically hauling water every day
for the animals to drink," said Betiger, 41, who is contemplating to
declare bankruptcy.
"It hurts, it scares me," he added. "It's already becoming financially
and physically unsustainable."
Argentina's drought has big repercussions for global food markets,
forcing farmers to slash harvest outlooks and denting grains supply from
the world's top exporter of soy oil and meal, the No. 3 for corn, and a
major wheat and beef supplier.
This in turn hits Argentina's ability to build up much-needed reserves
of dollars, threatening to derail a fragile economic revival and leave
the government unable to meet debt repayments amid spiraling inflation
and a deep fiscal deficit.
"In Argentina this drought situation has created a perfect storm," said
Cristian Russo, head of agricultural estimates at the Rosario grains
exchange, which cut its soybean harvest estimate this month to what
would be the lowest in 14 years.
The impact of the drought, linked to a third straight La Nina weather
pattern, could still get worse, he added, which could lead to further
cuts to the soy and corn outlook. The wheat harvest was already slashed
in half by drought.
"There are more reasons to be pessimistic and think that the numbers are
going to continue to collapse," Russo said, adding that in terms of the
harvest it was shaping up as the worst in 20 years.
"It's going to be a crisis like we haven't seen. That implies that many
producers are going to go bankrupt."
BILLION DOLLAR LOSSES
In another dust-dry Sante Fe field, Gustavo Giailevra lifts the head of
a pregnant cow lying still in the heat to coax it to drink. He doesn't
think she will survive, but he wants her to have a "decent death."
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Dried sunflowers are seen on a farm,
amid Argentina's worst drought in sixty years, in Tostado, northern
Santa Fe Argentina February 8, 2023. REUTERS/Miguel Lo Bianco
Like many farmers, Giailevra - who has experienced bad droughts
before - has seen his livelihood hammered over the last year. A
third of his 900 head of cattle have died and he has lost most of
his cotton and corn crops due to the acute lack of rain.
"You hear the calves bleat until they die. It's terrible," the
63-year-old told Reuters at his farm, where the water reservoirs he
had dug are all dried up, forcing him to bring what little water he
can in by truck.
Many farmers in the area say they have lost early-sown corn, wheat
and soy, so to rake back income they have planted fields with more
drought-resistant cotton. Many have lost cattle, which threatens to
hit beef supply and push up prices.
The government has rolled out some tax relief measures for farmers,
though with depleted state coffers has limited firepower. Farmers
who Reuters spoke to said the measures were just "patches".
Around the region Reuters visited, the impact of the drought was
stark.
The El Bonete lagoon in the nearby town of Vera has completely
vanished, as have the species that lived in and around it. One town
had faced over a month without mains water.
The economic hit of the drought to producers, meanwhile, could be
around $10.5 billion, said Julio Calzada, head of economic research
at the Rosario exchange, mainly due to a decline in exports.
"Argentina would lose about $8 billion worth of exports," he said,
adding that this would represent a loss of some $3.5 billion in
terms of government revenues, hurting already depleted currency
reserve levels.
"The national economy relies on income from rural areas," he said.
"This (drought) is the main problem for the economy."
(Reporting by Lucila Sigal; Additional reporting by Maximilian
Heath; Editing by Nicolas Misculin, Adam Jourdan and Aurora Ellis)
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