The Institute for Studies on Argentine and Latin American Reality (IERAL) issued a report with an adapted approach to the problem facing the harvest in the country due to the severe drought and late frosts that have affected various areas in recent times.
They assure that the climatic adversities have continued and have deepened their damage on extensive agricultural production, the main source of income generation for the agricultural sector and foreign currency in the country. All the variables associated with agricultural activity (production, exports, contribution to collection) have been corrected downwards in recent weeks. Due to this, the macroeconomy of 2023 will not have the very good numbers that the agricultural sector achieved in the last two years.
The latest projections handled by the Stock Markets (Cereals and Commerce) and their own estimates, at IERAL they have built three new
production scenarios, which give rise to many other scenarios of income, exports and contribution to the collection of export duties. If you have a
“base” scenario, another called “improved base” (which gives the possibility of some positive surprise, although unlikely, in the coming weeks) and a third referred to as “deteriorated base”, which tries to capture very recent adverse climatic phenomena (unusual frosts in areas that were doing relatively better than others)
As a reference, the baseline soybean scenario assumes a production of 34.5 million tons in the 2022/23 cycle, imports of 6.0 million tons, milling of 36.0 million, exports of soybean grain for 1.5 million and final stocks around 2.0 million tons. In this baseline scenario, total exports of the main agricultural products and industrial derivatives (grains, oils, flour, beef and dairy products) would be close to USD 37.8 billion in 2023, with a drop of USD 8.4 thousand. million compared to the previous year (-18%). This foreign exchange loss is exacerbated in the deteriorated baseline scenario (-USD 10.1 billion, -22%), while it remains high, but somewhat lower in the improved baseline scenario (-USD 6.5 billion, -14 %)
Regarding export duties, assuming constant rates at current levels, the collection on main agricultural products (and their relevant industrial derivatives) could be close to USD 7.6 billion in the baseline scenario, estimating a drop of USD 2.05 billion with respect to the contribution estimated for this same group of products in 2022 (-21%). In the improved baseline scenario, the drop would narrow to USD 1.5 billion (-16%), while it would widen in the deteriorated baseline scenario, in which it would reach USD 2.4 billion (-25% yoy over revenue collection). product group and -19% yoy on total tax collection)
In anticipation of the results of the new projections, it can be said that the macro of 2023 will not find in the agricultural sector an extraordinary contributor to the economic life of the country, as it was in the two previous years, in which very good numbers were observed. in terms of income, generation of foreign currency and contribution to collection. On the contrary, the agricultural sector will be hard hit this year, affected by weather that has been surprisingly damaging to production, which has included not only an unusual drought in areas with normally good rainfall records, but also
also very atypical situations in terms of temperatures, with extreme values, very high, followed a few days later by very low records.
See the full report: