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February 10, 2015

Agriculture in the State of Sao Paulo Impacted by Dry Weather

The Agriculture and Livestock Federation of the State of Sao Paulo (FAESP) is warning that the high temperatures and lack of rainfall in late 2014 and early 2015 is having a significant impact on farmers and ranchers in the state. The high temperatures and lack of irrigation water due to low water levels in the state's reservoirs could result in losses of 20% generally across the state and in specific regions, as high as 70%.

FAESP is still in the process of surveying the state concerning the damage, but losses are already being reported by producers in the state including:

Grain - The two principal grain crops in the state are soybeans and corn and farmers in the state reduced their full-season corn acreage in favor of more soybeans, but the dry weather has impacted both of the crops. The dry weather impacted the corn during the grain filling process and the soybeans during the pod filling process. Statewide, the grain yields might be down 10% with losses as high as 50% or even 70% in the hardest hit areas of the state.

Sugarcane - Sao Paulo is the number one sugarcane producing state in Brazil responsible for 55% to 60% of Brazil's production. The high temperatures and lack of rainfall has impacted the regrowth and the development of the sugarcane crop. The sugarcane production is expected to be disappointing again this year when the sugarcane harvest starts in late March or early April. There is speculation that some sugar/ethanol mills in the state might not even process any sugarcane this harvest season due to low supplies of sugarcane and poor sugar and ethanol prices.

Coffee - The dry weather impacted the early coffee flowering and berry formation and some of the flowers were aborted. The dry weather in October convinced some producers to prune back some of their least productive coffee trees. The rainfall has improved lately, but not soon enough to prevent a disappointing coffee crop.

Oranges - There was a good early flowering of the orange trees, but subsequent hot and dry weather resulted in some flower abortion. Orange production is expected to be down this year, but producers are hoping for better prices due to the reduced supplies.

Rice - Rice producers had a difficult time getting their rice planted due to dry weather and a lack of irrigation water. Some producers opted for rice varieties that tolerate less irrigation and the total rice acreage in the state is expected to decline by 20%. In the hardest hit areas, some farmers opted to substitute corn in place of rice.

Horticulture - Vegetable production, which is highly dependent on irrigation, is expected to be down 20% or more due to a lack of irrigation water.

Livestock - The dry weather has also resulted in less than optimum pastures resulting in slower than normal weight gain for beef cattle and reduced milk production due to reduced silage production. Farmers who produce pasture grass seed are also expected to be impacted.

The use of irrigation is expected to continue being restricted or even prohibited until there is sufficient rainfall to recharge the state's reservoirs. In the worst case scenario, there may also be electrical rationing in the months ahead also due to low water levels.