BUENOS AIRES, March 13 (Reuters) – Argentine President Mauricio Macri said the government would provide some debt relief to farmers struggling through what he described as the country’s worst drought in 40 years, which has resulted in dramatic cuts to soybean and corn crop outlooks.
Four months of dryness in the world’s No. 3 exporter of both crops, as well as the top supplier of soy-based livestock feed, have reduced estimates for the soy harvest to below 45 million tonnes, compared with expectations earlier in the season around 55 million tonnes.
Macri said the central bank will soon publish a resolution delaying maturities on farm loans to prevent producers from falling into arrears, while the state-run Banco de la Nacion will launch new credit lines with generous grace periods to allow farmers to continue purchasing agricultural equipment.
“This way, we will allow you to obtain new loans to get through this difficult moment,” Macri said in a speech at a farm equipment convention in San Nicolas, a city in Buenos Aires province in the heart of the South American country’s Pampas grains belt.
Farming is crucial to Argentina’s economy and the smaller crop is expected to reduce growth. The economy will likely expand for a second straight year after a biting recession in 2016.
The drought has prompted spikes in corn and soy futures prices on the Chicago Board of Trade.
The measure would apply to farmers with loans from both public and private banks who qualify under Argentina’s agricultural emergencies law, and will be approved at the central bank’s next board meeting, a central bank spokesman said.
It would extend by 45 days the period of time farmers have to pay before falling into a lower class of debtor, which would limit their ability to get loans. The government had previously extended such relief to farmers who had suffered from floods, the spokesman said.