The drought left losses of 1,883 million dollars to the agricultural sector of Uruguay

Uruguay experienced a drought and an unprecedented rainfall deficit, which generated significant damage, losses and impacts on the agricultural sector, which triggered the declaration of four agricultural emergencies by the Luis Lacalle Pou government.

“It is estimated that the water deficit registered in 2022-2023 generated direct damage and losses in the agricultural sector for 1,883 million dollars, which is equivalent to around 3 percent of the moving average annual gross domestic product (GDP) of the last three years,” reveals the Ministry of Livestock, Agriculture and Fisheries of Uruguay.

The lack of rain, drought, average temperatures and evapotranspiration above normal had effects on the water status of the soils and vegetation, which makes the development of some dryland crops and forage for animal feeding impossible. .

In the dairy activity, most of the costs associated with the drought were due to the increase in livestock supplementation costs, explains the agency in charge of Fernando Mattos.

Also, a drop was observed in the level of milk production at the primary level, which affected the industrial phase of the chain (reaching its minimum point in February 2023, when production was 9.3 percent lower than that of the same month. 2022), details.

The incremental cost is 5.4 cents per liter produced in 2023, which would bring losses to 113 million dollars. In turn, the total impact of the drought on annual milk production was estimated at around 61 million liters by 2023, which would imply a turnover of 23 million dollars less, attributable to the climate event. Therefore, total direct losses to the primary dairy sector are estimated at $136 million.

In livestock activity, a cost of losses of 287 million dollars is estimated, caused by the number of calves that will not be born due to lower pregnancy and the lower volume of slaughter, says the Ministry of Livestock, Agriculture and Fisheries of Uruguay .

The loss due to fewer calves to be born in the 2023-2024 livestock year will be 237 million dollars, assuming that the environment fell by 4 percent and that procreation will be 15 percent lower than expected, which implies that 455 will be born. one thousand fewer calves: “This will result in fewer cattle available for slaughter in the years 2025-2026 onwards.” The estimated loss due to a lower volume slaughtered for the current fiscal year 2022-2023 is 50 million dollars.

The need to have food for livestock generated an increase in costs for producers due to greater supplementation and loss of pastures due to drought.

A loss of 35 percent of the grassland area was estimated and that producers planted 70 percent of said area with winter greens to make up for the lack of food, which is equivalent to a cost of replacing lost grasslands of 145 million. of dollars.

In the case of soybean cultivation, the lack of water caused crops with little vegetative growth and crops with an absence of bean formation.

The harvest was delayed and the average productivity of the country was estimated at 851 kilograms per hectare harvested (641 kilograms per hectare planted), the lowest historical record for the crop and greatly lower than the country average of 2,300 kilograms per hectare.

A high heterogeneity between farms was evident and there were quality problems of the harvested grain (humidity, foreign bodies). The area lost, not harvested (fallow) or destined for animal grazing or reserves reached 25 percent of the planted area (1.01 million hectares). The price of the oilseed decreased compared to previous months, as a consequence of the balance of international supply and demand.

The water deficit recorded in 2022-2023 generated direct damage and losses for soybean cultivation amounting to 832 million dollars. Regarding corn, a relevant area destined for bales, silopacks and “green chopped” for animal feed was reported, raising the unharvested area to 47 percent of the area planted with this crop (188 thousand hectares).

The average productivity was estimated at 2,666 kilograms per harvested hectare (1,415 kilograms per hectare), which represented a loss due to lower productivity of more than 50 percent in relation to the country’s historical average of 5,800 kilograms per hectare. The water deficit recorded in 2022-2023 generated direct damage and losses to the corn crop for 266 million dollars.

A harvest of 68.7 million kilograms is estimated, which translates into a production loss of 28 percent (compared to the average of the last six years), valued at 12 million dollars.

On the other hand, the good quality of the grapes and their alcohol content stand out. Wine production would not be affected, given the current available stock of 40 million liters (the 2022 harvest totaled 104 million kilograms), which would cover the decrease in 2023 and 2024.

The losses of spring plantations were estimated at approximately 5 thousand hectares due to the drought. In addition, losses due to annual growth of plantations, which will affect the future availability of wood, affected between 25 percent and 30 percent of the average annual growth in volume, with a total estimated cost of 162 million dollars.

In the case of deciduous fruit trees, the estimates of productive losses are between 45 percent and 50 percent in pears and apples, below the average production of the last three harvests, which translates into a total of 35 million dollars. In citrus fruits, a certain impact was seen in the volume produced (product of smaller sizes).

According to private sector estimates, the reduction would be around 10% in the productive volume compared to last year (-4 percent compared to the average of the last three years), which implies 8 million dollars in losses due to the drought.