Aug 13, 2010
Low Rice Prices Discourage Producers in Rio Grande do Sul
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Rice farmers in Rio Grande do Sul suffered yield losses of up to 15% in their 2010/11 rice crop due to excessive rains during planting and now they are encountering additional difficulties due to reduced exports and lower rice prices. This is certainly not what they had expected after the 2009/10 rice crop came in significantly below expectations.
Rice producers in the state have sold approximately 34% of their production, which is the same as last year at this time, and they are storing the remainder of their crop in hopes of improved prices.
With a significant reduction in rice production, farmers has anticipated stronger domestic rice prices, but that has not been the cased Rice producers in Uruguaiana in western Rio Grande do Sul received an average of R$ 26.62 per sack of rice in July of this year, which was 9.7% less than the price they received in July 2009.
The one thing that could support rice prices would be improved exports, but that has been difficult to achieve. By the end of July, Rio Grande do Sul had exported 174,000 tons of rice compared to 362,000 tons of exports that occurred by the end of August in 2009. The strong Brazilian currency has made rice exports more difficult by making Brazilian rice exports uncompetitive in the world market.
All of the rice produced in the state is irrigated and Rio Grande do Sul accounts for 61% of Brazil's total rice production. If rice producers in the state decide to cut back on their production due to depressed prices, they might plant some additional soybeans instead. The rice produced in the rest of Brazil is rain fed and it competes with soybeans for the same acreage. Therefore, there is the possibility of a few additional soybean acres in the areas of central Brazil where rain fed rice is grown.