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Major drought causes heavy losses in south Brazil.

Argentina: Harvest will reach 80 million tons.

Major drought causes heavy losses in south Brazil

A major months long drought in the southern Brazilian state of Rio Grande do Sul has caused so far losses estimated in 1,65 billion US dollars plus the low yields of future harvests, reported the regional Industries Federation.

"The 1.65 billion US dollars estimate only reflects the fall in value of the region's current soybean, rice and corn crops". If the negative impact from taxes and the appreciation of the Real against the US dollar are also considered, losses jump to over 2,3 billion US dollars added a spokesperson for the Industries Federation. Authorities from Rio Grande dos Sul, which borders with Uruguay and is one of Brazil's main agricultural areas, have declared an emergency in most municipalities opening the way for federal government relief and farmers losses compensations. The 2005 outlook, according to private sources, is that the drought situation will worsen before recovery begins with a 1,3 billion US dollars drop in the state's GDP, a loss of 21,000 direct jobs and a major contraction in agricultural activity that will have an impact for several years ahead.

Argentina: Harvest will reach 80 million tons

Agriculture Under-secretary Claudio Sabsay confirmed yesterday that the grain harvest for 2004-2005 will reach 80 million tons, which will imply an 11 million ton increase, compared to the previous cycle and highlighted that the grain sector "constitutes the main source of income" in Argentina.

The official said that the objective of the grain sector "has to move forward in the integration of production and value chains, to extend into a new economic horizon as a clear opportunity to our country," said Sabsay, at the inauguration of the CIARA-CEC 2005 conference, which took place at a downtown hotel. Sabsay said that a high level of productivity in the Argentine farming industry was due to different factors, among them the "high performance by cereals," but warned that the future of Argentine exports will be linked to a new profile in the global market. Within the framework of the conference, such as the problems in the farming industry and the perspectives in the cereal an soybean sectors, Sabsay pointed out that on an international level there are "high production levels and greater consumption in the developed countries as a response to genetic innovation and changes in consumers' habits." He also said that the high productivity rates "imply a strong volatility in prices," and that in such a scenario "it is necessary to have risk insurance" that is specific, and this is why the Agriculture Secretariat opened a special office and held coordinated actions with agencies in Mercosur and other associated members. Sabsay also observed "greater competition" in the world grain market, and in the emergence of Eurasian players, as well as Bolivia and Paraguay in soybean to Europe, "which is headed to self-sufficiency in corn," he said. Regarding China, the under-secretary highlighted the goals obtained in soybean, but said that those achievements have to be spread into other crops, "they should expand to corn, wheat, and from there to the higher levels in the production chains." Sabsay also presented the agreement reached with China in this matter as "the best method to face international competition." The foods under-secretary also said that within the current scenario, "quality has an important role" for grain trade, which is why the government is developing a specific programme for wheat, and in this sense considered that "the development of differentiated products must include sunflower of high oil value and high protein soybean," among other products. On a different note, the official said that the use of genetically modified seeds in grain production "is no longer under discussion in Argentina or the rest of the world," and highlighted that the government is carrying out a study to attend to the "greater demand from importing countries" in sanitary issues, which is being done with the support of the FAO. "Undoubtedly, the main challenge for the sector will be to move forward in each of the chains of production. This will allow for the necessary job creation," the under-secretary added. The official said that "all aspects are fundamental variables" and that the "soybean chain is the most successful case from which other production chains should draw on as an example." Sabsay concluded by saying that "from the commitment assumed by everyone, the sector's new horizon will become more favourable."