Anuário Brasileiro do Arroz 2011 - Unemat

The rice production chain in Brazil
and major analysts of the sector believe
that the price recovery process in
Brazil is in the hands of the federal government.
Efficient commercialization
mechanisms would be the solution.
“Without any artificial rise in prices,
through federal government support
measures, there is no change in sight
within this scenario. In global terms,
Help
from
above
Recovery of the
national rice
prices depends
on initiatives
by the federal
government, like
commercialization
mechanisms
with high carryover stocks, things are
not likely to change. In Brazil and
in Mercosur there are huge carryover
stocks”, explains Tiago Sarmento
Barata, analyst with Agrotendências
Consultoria em Agronegócios.
The global scenario includes prices
on the decline and stocks on the
rise, highly valued Brazilian currency,
record national crop and stable consumption,
besides pressure coming
from carryover stocks in Mercosur
countries. The mechanisms launched
by the Brazilian federal government
up to April were not efficient because
of too much bureaucracy involved,
difficulties in contacting the producers,
pressures from the bumper crop
and, above all, from the exchange
rate. “Market and structural factors
prevented any effective reaction, but
the PEP (Premium per Output Flow)
should get more effective over the
year, pushing domestic prices to equal
terms with import prices, now above
the domestic quotes”, says Élcio
Bento, analyst with Safras & Mercado.
In the meantime, sectorial entities
are after new actions by the federal
government, in Brasília, to guarantee
the minimum price of R$ 25.80 per
50-kg sack of rice in the husk, profits
for the growers and the prevention of
losses. The entities are also demanding
structural measures intended to
improve the competitive edge, besides
investments in infrastructure and logistics
and an import compensating
policy, says the president of the Rio
Grande do Sul Federation of Rice
Growers’ Associations (Federarroz),
Renato Rocha.
These moves, nonetheless, are expected
to go into force as of the coming
crop. At the moment, priorities
include emergency mechanisms, like
auctions focused on public and private
option contracts, the establishment
of a target price, loan renegotiation,
and end to imports and speedier crop
shipment, with support to exports and
humanitarian donations.
Solace within this sense came in
late April, with the decision of the
National Monetary Council (NMC)
to reopen the Stimulus Program for
Sustainable Livestock Production
(Produsa). The deadline was extended
until 30th September. The program
consists in a special credit line to serve
farmers affected by the climatic consequences
from 1st November 2009
to 31st March 2010. Furthermore, the
NMC postponed by up to 100% the
negative balance of the Federal Rice
Loan Operations of the 2009/10 crop.
The main beneficiaries of the measure
are the growers in Rio Grande do Sul
and Santa Catarina.
Among the mechanisms which had
been made available was the Federal
Government Acquisition (AGF) program,
which offered R$ 202 million in
contracts from February to April 2011.
However, because of a shortage of credentialed
warehouses, excessive bureaucracy
in accessing the mechanism
and lack of producer guarantees, only
some 10 thousand tons were acquired
through the system. The auctions
staged by the PEP offered contracts
amounting to 1.022 million tons to
the states of Rio Grande do Sul, Santa
Catarina, Paraná and Mato Grosso do
Sul, with 704.4 thousand tons effectively
negotiated. In values, it was R$
72.3 million.
The lack of profits is particularly serious
in Rio Grande do Sul and Santa
Catarina. The two states account for
73% of the national production. It is
estimated that upwards of 23 thousand
producers incurred losses and
more than 80% of them have no access
to public mechanisms for lack
of credit or collateral, or because of
ignorance regarding the process. “We
are at the mercy of the government”,
Rocha confesses.
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