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August 20, 2012

Rice Acreage Declines, Soy Acreage Increases in R. Grande do Sul

Farmers in the rice producing regions of Rio Grande do Sul are going to reduce their 2012/13 rice acreage in favor of more soybean production. According to the Rice Producers Federation of Rio Grande do Sul (Federarroz) the reason for the switch is because the reservoirs needed for the irrigated rice production in the 32 main rice-producing municipalities only have 58% of their normal volume of water. Farmers are going to be very hesitant to plant all their potential rice acreage without a guaranteed supply of water in the reservoirs.

Meteorologist have been predicting a mild El Nino this fall and usually an El Nino results in above normal rainfall during the planting season, but this El Nino has been slow to develop. Currently, it looks like it will be a mild El Nino by the time planting occurs and the forecast now is for normal or slightly below normal rainfall during the spring planting. Even average rainfall will not be enough to replenish the reservoirs after a severe drought engulfed the region during the last growing season.

Federarroz is expecting the rice acreage in the state to decline 13% to 22% from 1,036,000 hectares in 2011/12 to 800,000 to 900,000 hectares in 2012/13. These estimates could change over the next 60 days if the rainfall deficit from the fall and the winter is compensated for by heavier than normal spring rains. Between 80% to 90% of the non-rice planted hectares will instead be planted to soybeans, which is what normally happens during dryer than normal years.

Rice planting is expected to start in about 30 days, but in the 32 municipalities surveyed between August 1 and August 7, the reservoirs only had enough water to plant 57% of last year's acreage (856,180 hectares) when the reservoirs were full at the start of the planting season. It is possible that rainfall over the next 60 days could refill the reservoirs, but a minimum of 600 mm (24 inches) of rainfall would be needed over the next 60 days to convince farmers to plant all their potential rice acreage.

Agronomists are recommending to the rice farmers to only plant the additional soybeans in their best drained fields and to plant soybeans with the resistance to multiple root diseases. The switch to additional soybean production is occurring all across Brazil as farmers reduce the acreage of full-season corn, cotton, dry beans, and rice in favor of additional soybean production.