January 19, 2012

State of Emergency Declared in Argentina and Southern Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Argentine government has declared a state of emergency for crops and livestock in the country due to the prolonged drought impacting the country. According to the Minister of Agriculture, the state of emergency will extend until the end of the year for the provinces of Buenos Aires and La Pampa. For the province of Misiones, it will be in effect for 180 days. For the province of San Juan, it will be in effect until May 31st and in Neuquen, it will last until March of 2013 due to the combination of dry weather and the eruption of the Puyehue volcano in nearby Chile. For farmers in other provinces the government is planning to help them through subsidies and tax incentives.

Argentina is one of the five largest grain producing countries in the world and it is suffering through its second drought in three years. During the last drought in 2008/09; the country's grain production fell 35 million tons short of original expectations. Meteorologists are blaming the current La Nina for the dry weather in Argentina and southern Brazil. La Nina has recently showed signs of weakening, but the damage has already been done especially for the corn crops in both Argentina and Brazil. The later maturing soybeans still have time to recuperate, but the early maturing soybeans will have reduced yields especially in the state of Parana in southern Brazil.

In the three southern states of Rio Grande do Sul Santa Catarina, and Parana in southern Brazil, more than 450 municipalities have also declared a state of emergency due to the drought. In addition to lower grain production, livestock producers are reporting lower milk and beef production as well.