Anuário Brasileiro do Arroz 2011 - Unemat

Sílvio Ávila
32
A long way
from equilibrium
Brazilian market must adjust its prices to international
standards if the production is to be shipped abroad and if
the pressure induced by excessive supply is to be relieved
Brazil’s 2010/2011 bumper rice crop
2010/1, which, according to figures released
by the National Supply Company
(Conab), reached 13.46 million tons,
compared to the domestic consumption
of 12.8 million tons, resulted in
market imbalance and serious producer
concerns. The result of the harvest will
not even be celebrated for its productive
efficiency, seeing that the declining
prices in the domestic market, a
phenomenon that started in late 2010,
has affected the sector, triggered a
trade crisis, annihilated farmers’ profits
and caused losses. Not to mention that
2010 had also been a difficult year.
Up to May, the emergency mechanisms
liberated by the Brazilian government
had not shown strength enough
to recover the prices. It is the case of
the Premium per Output Flow (PEP),
Federal Government Loan (EGF) and
the Federal Acquisition (AGF) program.
Pressure stemming from the exchange
rate and supply was stronger that the
government move to control the market,
in spite of the soaring export levels
at the beginning of the 2011/12 commercial
year.
In light of this scenario, the sector is
pressing the government for measures
that guarantee the minimum price -
R$ 25.80 per 50-kg sack of rice in the
husk, Type 1, as set forth by law. As
this price exceeds international parameters,
it generates another problem:
even if the mechanisms worked effectively,
the value would pave the way for
rice imports from the Mercosur bloc to
flood into the Country. Signatory to the
free trade agreement with the Mercosur
bloc and a free market advocate, Brazil
has no political or economic interest
in blocking imports, although greatly
required by all rice producers. But, on
the other hand, the Country is getting
to grips with the fact that something
must be done as a manner to protect
the sector and cushion the negative impact
on the economy in South Brazil.
To understand this scenario, it is
necessary to clarify that, besides the
new crop, interference is coming from
the huge carryover stock in Brazil,
reaching about 2.2 million tons, of
which 950 thousand tons come from
the grain carry over program of the
federal government. The total stock
increased by one million tons in one
year, matching the amount of imports
during the 2010/11 commercial year:
1.04 million tons. The purchases were
triggered by the competitive prices
practiced in other Mercosur countries,
while the cereal produced in South
Brazil attracts no buyers because of
heavy taxes levied on it, high production
costs and the unfavorable exchange
rate policy.