Rice production in the country is the lowest in 25 years, and consumers pay the bill – 03/09/2023 – Shuttle

Brazilian rice production should be less than 10 million tons this year, which has not occurred for 25 years. The bean has been below 3 million tons for three harvests, a volume lower than the historical average.

Data are from Conab (Companhia Nacional do Abastecimento), which continues to point to a super harvest of 310 million tons of grain this year, driven by soy and corn, which represent 89% of that volume.

The production of basic products retreats because they lose space for products that are more open to the foreign market, such as soybeans. In some regions, the production costs of rice and beans and climate risks drive producers away from these crops.

The bill falls on the lowest income consumer. From 2019 to 2022, beans had an annual increase of 20.4% on supermarket shelves. In that same period, rice rose 15.4% per year.

These percentages are well above the average annual inflation of 6.8% in the period, according to data from Fipe (Fundação Instituto de Pesquisas Econômicas).

The drop in production and the smaller supply of these products have been raising the level of retail prices, making it difficult for consumers to return to more affordable prices.

Although they have been losing space on the consumer’s plate, rice and beans are still important in the diet of a large part of the population, especially those with lower purchasing power.

The prices of these basic products should not let up this year. Rice is at the beginning of the harvest, but the reduction in production should inhibit the drop in prices in this first semester. In the second, the rises become more pronounced.

With the reduction of national production, Brazil will have to export less and import more this year. The carry-over stocks from this harvest to the next will also be smaller, which prevents price retractions.

According to Conab, the country will have a surplus of only 1.75 million tons of cereal at the end of this year, enough for 61 days of consumption. The annual average of closing stocks for the two previous years was 2.5 million tons.

For the IBGE (Brazilian Institute of Geography and Statistics), the state of Rio Grande do Sul, leaders in national rice production, will have a harvest of 6.8 million tons, 9% less than last year.

The fall in bean production to 2.9 million tons, a volume 2.1% lower than the previous one, also forces a retraction in the final stocks of the product. Unlike rice, however, the carry-over stocks of the legume will be sufficient for just 31 days.

After a period of highs, bean prices retracted in February. The fall in production in the year, however, will not leave room for large variations.

Corn, on the other hand, even with the record harvest of 125 million tons, will have carry-over stocks for the other harvest of only 7.3 million, the lowest in ten years. Domestic consumption is stable at 79 million tons, but exports rise to a record 48 million, shrinking the market.

For the USDA (United States Department of Agriculture), Brazilian exports of the cereal should add up to 52 million tons, with the country assuming the world leadership.

Conab data differ from those of USDA because the Brazilian organization considers the commercial year from February of one year to January of the other. USDA takes October-September exports into account.

Unlike other products, wheat numbers show a more favorable scenario for consumers. The record harvest of 10.6 million tons will allow the final stock of the 2022/23 harvest to rise to 2.8 million tons in July, the highest since 2009.

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