"Things are bad, we don't have any left, we have no room to stop things for four or five days. We're practically transporting water every day for the animals to drink," said Betiger, 41, who is thinking of declaring bankruptcy. "It grieves, scares," he added. "It is already becoming financially and physically unsustainable."

The drought in Argentina has major repercussions on global food markets, forcing farmers to reduce harvest prospects and hurting the grain supply of the world's largest exporter of oil and soybean meal, the third largest corn exporter and a major supplier of wheat and beef.

This, in turn, affects Argentina's ability to accumulate much-needed dollar reserves, threatening to derail a fragile economic recovery and leave the government unable to meet debt payments amid spiralling inflation and a deep fiscal deficit.

"In Argentina, this drought has created a perfect storm," said Cristian Russo, head of agricultural estimates for the Rosario grain exchange, which lowered its soybean harvest estimate this month to what would be the lowest volume in 14 years.

Economic impact of drought in Argentina

The impact of the drought, linked to La Niña's third consecutive weather pattern, could still worsen, he added, which could lead to further cuts in soybean and corn prospects. Wheat harvesting has already been halved by drought.

There are more reasons to be pessimistic and think that the numbers will keep falling, Russo said, adding that in terms of the crop it is shaping up as the worst in 20 years. "It's going to be a crisis like we've never seen. This implies that many producers go bankrupt."

The government has launched some tax-exempt measures for farmers, but with state coffers exhausted, it has limited firepower. The farmers with whom Reuters spoke said the measures are just "patches." In the region visited by Reuters, the impact of the drought was strong. El Bonete lagoon, in the town of Vera, completely disappeared, as did animals that lived there. A city faced more than a month without water from the net.

The economic impact of the drought on producers could be about $10.5 billion, said Julio Calzada, head of economic research at the Rosario stock exchange, mainly due to the decline in exports. "Argentina will lose about $8 billion in exports," he said, adding that this would represent a loss of about $3.5 billion in government revenue, hurting already exhausted levels of foreign exchange reserves.

"The national economy depends on the income of rural areas," he said. "This (drought) is the main problem for the economy." The information is from Reuters.

Source: Canal Rural