The Financial Impact Of The Argentine Drought

In 2008, Argentine soy exports reached 16.5 billion US dollars (23% of all Argentine exports), which in tax revenue terms represented 5 billion US dollars.

This seasons drought-affected crop will see the Fernandez de Kirchner administration pick up an estimated 1.2 billion US dollars less in tax revenues from the controversial soy tax in 2009.

Meanwhile exports of corn in 2009 are expected to more than halve from 15.64 million tonnes to 6-7 million, whilst wheat export licences have already been halted after the crop was slashed from 16 million tonnes last season to around 8.3 million tonnes.

Overall Argentina’s total grains and oilseeds crop in 2009 is expected at around 70 million tonnes, down from the 97 million tonnes of last year and even further distant from the original hopes of over 100 million tonnes.

This graphically highlights how the Fernandez de Kirchner administration can ill-afford to climb down in the dispute with farmers over the 35% soy tax, the books are looking severely imbalanced already.