Dec 23, 2014

Working Group Established in Mato Grosso to Asses Drought Impact

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

The Secretary for Economic Development for the state of Mato Grosso (Sedec) decided to form a "Working Group" of the various stakeholders in the state to monitor and evaluate the impact of the current drought on the soybean crop in the state. The Working Group held its first meeting on December 17th and they have been assigned the task of evaluating the situation on the ground in the various regions of the state and to assess the losses being incurred due to the hot and dry weather. Mato Grosso is the largest soybean producing state in Brazil responsible for approximately 30% of Brazil's soybean production.

The working group is composed of: the Secretary for Economic Development (Sedec), the Plant and Animal Sanitation Department (Indea), the Federal Agricultural Superintendent (SFA-MT/Mapa), the Soybean and Corn Producers Association (Aprosoja), Ampa, the Mato Grosso Agriculture Association (Famato), the Mato Grosso Institute of Agricultural Economics (Imea), and elMAmt.

The group will study the overall economic impact of the drought on the state's agricultural economy. The Governor is very interested in keeping abreast of what is happening in the agricultural sector because it accounts for 51% of the state's gross domestic product. The most important crop in the state is soybeans followed by corn and then cotton.

Imea has already reduced their estimate of the soybean production in the state by 1.0 million tons from 29 million to 28 million and it could decline even further in subsequent reports. That reduction already would account for R$ 1 billion in lost revenue. The drought is not only impacting farmers, it is also expected to impact suppliers as well. Fertilizer sales in Brazil for 2015 is down about 9% and chemical sales are down 23%.