“We are working on a campaign to reduce supply by encouraging a decrease in planted area…”
Denis Dias Nunes is a farmer, president of the Federation of Rice Farmers’ Associations of Rio Grande do Sul (Federarroz), and partner-owner of Agroriza Agricultura e Pecuária and Agroriza Planejamento Agropecuário Ltda.
Nunes is an agronomist from the Eliseu Maciel School of Agronomy and former president of the Association of Agronomists.
AgriBrasilis – What are the reasons for the crisis in the rice market?
Denis Nunes – The current scenario is the result of a combination of factors. Last year’s high prices led Mercosur countries to significantly expand their cultivated area. In addition, weather conditions in Rio Grande do Sul were very favorable, allowing us to achieve record yields per hectare. Added to this is India’s return to the rice export market, which increased global supply and put pressure on international prices. The result was a situation of oversupply and devaluation of the product.
AgriBrasilis – Why are prices so low?
Denis Nunes – The drop is a direct consequence of high supply, both in the domestic and international markets. When there is an excess of product available, the price to the farmer falls rapidly, as the market seeks to balance supply and demand. This dynamic has been intensified by foreign competition and the large harvest in the southern region.
AgriBrasilis – Have prices for the end consumer fallen at the same rate? Why?
Denis Nunes – No. The fall in prices for the end consumer occurs more slowly because there are several stages and agents involved before the product reaches the shelves. First, the processing industry buys the rice, then the product goes through wholesale and retail channels before reaching the consumer. This process involves different negotiations and deadlines, which creates a certain delay.
AgriBrasilis – What are the impacts of competition from imported rice, especially from Paraguay and Uruguay?
Denis Nunes – The competition is quite unfair. Paraguay and Uruguay produce mainly for export and consume very little domestically. In the case of Paraguay, practically all production is directed to the Brazilian market, mainly to processing industries in Minas Gerais and São Paulo. They have lower production costs, more favorable logistics, and do not pay ICMS (Value Added Tax), which gives them a competitive advantage. As they depend on the Brazilian market, if the price here falls, they also reduce their prices to remain competitive. This puts even more pressure on domestic farmers.
“…it is essential that the government use instruments from the Minimum Price Guarantee Program…”
AgriBrasilis – Why does Federarroz recommend signing up to the public contract for the option to sell rice?
Denis Nunes – Because it allows farmers to negotiate above current market prices, which are below the minimum price. The contract offers the possibility of selling at a better price to Conab, and farmers retain the option of delivering the product or not, depending on market price developments. If the market reacts and prices rise, they can choose not to exercise the contract. It is an important tool for providing security at a time of sharp devaluation.
AgriBrasilis – What measures should the government take to help the sector?
Denis Nunes – First, we need trade safeguards and a rigorous investigation to ensure that imported rice meets the same environmental and labor requirements imposed on Brazilian farmers . Otherwise, it is unfair competition. In addition, it is essential that the government use instruments from the Minimum Price Guarantee Program, such as production flow premiums, to help balance the market and allow farmers to compete.
AgriBrasilis – What is the outlook for the coming months?
Denis Nunes – Unfortunately, the outlook is quite negative. We are working on a campaign to reduce supply, encouraging a decrease in planted area and an increase in exports, with the aim of reducing carryover stocks. Without these measures, prices are likely to remain under pressure and farmer profitability will remain compromised in the coming months.
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