Anuário Brasileiro do Arroz 2011 - Unemat

Inor Ag. Assmann
28
Global crop
Brazilian crop is integrated with Mercosur and connected to the
world, under the influence of international chains and prices
When the Brazilian rice production
volumes suffered a frustration in excess of
1.3 million tons in the 2009/10 crop year,
the growers expected higher prices for the
commodity as a result of reduced offer, in
line with historical trends, to wit: smaller
crops, higher prices, and vice-versa. But
prices dropped, in a clear demonstration
that the market has changed and is now
chained to Mercosur and connected to the
world.
Surpluses from Argentina, Paraguay
and Uruguay filled the gap in Brazil.
Strong competition also came from the
United States and Asia. It means that the
market has changed and rice has become
a part of the “global village” since the
2005/06 crop, when Brazil stepped out
of the list of the 10 biggest rice importers
and joined the list of rice exporting
countries.
Rio Grande do Sul, which accounts for
more than 65% of the entire Brazilian
production, has set a target for shipping
abroad 10% of the crop, as a manner to
get rid of surpluses. Depending on the
year, this represents from 750 to 900
thousand tons. It counterbalances the imports
from Mercosur, which always impart
a negative impact on domestic prices.
In the meantime, over an eight-year
period, the State gradually increased its
annual crop by three million tons, through
technology and management maximization
acts, filling the gap left by the
Brazilian regions that produce dryland
rice. The centralization of the crop in
South Brazil (70% of the national production
volume), expanded by the Mercosur
surpluses, is bound to concentrate the
supply side and alter the market.
“Brazil is now a part of the internation-
al scenario and has to adjust to the rules
of this market”, explains Patricio Méndez
del Villar, analyst with the Center for
International Cooperation in Agronomic
Research for Development (Cirad, in the
French acronym). According to him, having
exported 620 thousand tons and imported
1.05 million in 2010/11, the country
occupies an important position in the
global market. “International prices will
greatly influence prices at home. Brazil’s
market is open to rice from Mercosur countries
and, if demand exists, even to third
party countries, like the United States,
Thailand and Vietnam, which are all very
competitive”, he explains. On the other
hand, Vilar understands that Brazil could
appear on the list of huge exporters, shipping
abroad upwards of a million tons a
year in the near future. “The challenge
consists in conquering obstacles, like excessive
taxation, high production costs,
logistic hurdles and the exchange rate.
There are also favorable factors, like the
quality acknowledged by some clients,
the sector’s motivation, the identification
of the business by the trading companies
and some advantages in terms of freight,
particularly to Africa”, he points out. In
the analyst’s view, the big problem of the
moment is the price.
CHANGE NEEDED The analyst
with Agrotendências Consultoria em
Agronegócios Tiago Sarmento Barata
says the new reality requires the growers
to adapt. “In the international market,
prices range from US$ 10 to US$ 12 a
sack, on average. This is the Mercosur and
the international reference, but surely way
below the Brazilian production cost. This
scenario can be altered only with struc-
tural changes, like a reduction of the tax
burden on inputs, external and internal
sales, less export red tape and logistic efficiency”,
he mentions.
According to Barata, emergency measures
intended to artificially push up farm
gate prices would only delay the problem
and turn the national market even more
attractive to the cereal from Mercosur
countries. He exemplifies saying that
a 50-kg sack of rice in the husk at R$
25.80, minimum price for the 58-percent
whole kernel pattern, would amount to
US$ 15.83 with the dollar at R$ 1.63 in
early April. “A highly attractive price for
the Brazilian Northeast and Southeast to
bring in rice from Uruguay and Argentina
for US$ 10 to US$ 12, in terms of equivalence”,
he explains. In his opinion, the
important emergency measures have to
do with product sales. “Rice must be channeled
out of Rio Grande do Sul, whether to
third countries or to consumers in other
regions”, he states.
Analysts maintain that commercialization
mechanisms are very important,
but must come in the company of structural
actions that reduce the production
cost and improve the efficiency of crop
sales, especially in Rio Grande do Sul.
Barata has no doubts about the difficulty
in following this course, which
will obviously demand sacrifices. “Brazil
has already understood its connection
with the world in terms of supply and
demand, but some sectors are still reluctant
in understanding that this connection
also holds for the prices, a fact
that requires urgent adjustments if
competitiveness is to be recovered. This
is the biggest challenge for the sector”,
he concludes.