Rice has been one of the hot topics in recent weeks as the federal government tries to import the grain after floods hit the state of Rio Grande do Sul. The state produces 70% of the country's rice and has already harvested 90% of it. The area planted for this harvest has been significantly reduced.

Brazil is producing less rice than it consumes and needs to meet domestic demand through imports and stocks from previous harvests, the Agriculture Ministry said. The country will produce 10.3 million tons of grain this harvest, while consumption should be 11 million tons, according to the National Supply Corporation (Conab).

As of April, the government expects Brazil to import 1.4 million tons of rice. That amount, combined with production and stocks (excluding exports), would have allowed for the accumulation of a supply of 12.4 million tons (taking into account the impact of the floods in Rio Grande do Sul), which would have met domestic consumption. However, since May, the government has raised its import forecast to 2.2 million tons, including rice intended to be purchased through public auctions. In this case, the supply on the Brazilian domestic market would amount to 13.1 million tons. The government's rationale is to avoid excessive price increases due to possible rice supply and distribution problems.

At the height of the flooding in Rio Grande do Sul, road and highway closures raised concerns about the state's ability to transport the rice harvest to other parts of Brazil. However, the Agriculture and Livestock Confederation of Rio Grande do Sul (Farsour) said that the flood waters have receded and that BR-101, the main highway for transporting grain, is now back to normal.

There is no official estimate of this figure yet. A report from Conab on Thursday noted that the May floods resulted in a loss of 100,000 tons of the state's rice harvest, a small figure compared to the 7 million tons of production projected for Rio Grande do Sul.

According to the Riograndense Rice Institute (Irga), 24,000 tons were lost in warehouses storing harvested rice, equivalent to 15 percent of the total amount stored. The Ministry of Agriculture and Conab said the decision to buy 300,000 tons of rice was not related to supply, but to speculation and rising food prices.

In one year, the price of rice for consumers has risen by more than 20%.In May, during the RS floods, the increase was 1.4% compared to April, but the increase was more significant in some areas, such as Aracaju (+8%), Porto Alegre (+6%) and Victoria (+5%). For example, according to Procon, in SP's supermarkets, a 5-kilogram bag of the product sells for an average of R$30. A year ago, the price was R$20, the price at which the government intended to sell rice.

According to experts interviewed by g1, the increase in the price of rice is related to a number of factors. For example, Evandro Oliveira, of the consulting firm Safras & Mercado, said that bad weather and increased production costs have led some producers to abandon rice cultivation in favor of more profitable activities, such as soybeans.

INTERNATIonAL PRICE RISE: Global rice prices have risen due to disruptions in exports from India, which accounts for 35 percent of global rice trade, said Carlos Cogo, managing partner of agribusiness at Cogo Intelligence.

Rio Grande do Sul experienced La Niña for three consecutive years (2021, 2022 and 2023), which led to severe drought in the region, resulting in yield losses. This was followed by the El Niño phenomenon, which led to flooding in the second half of 2023, resulting in the disruption of grain sowing. This situation caused some producers to migrate to more profitable plantations, such as soybeans and corn. As an example, the cost of rice production in the city of Yana (RS), Uruguay (one of the main cereal-producing regions), reaches 12,000 Brazilian reais per hectare, while planting soybeans costs slightly less than half that, for example, around 5,000 reais per hectare in San Gabriel (RS).

Conab data also shows that the main costs of growing rice are land rent, fertilizers and pesticides. But this is not a new phenomenon. a report by g1 shows that over 16 years, the area planted to rice and beans has declined by more than 30 percent across Brazil, as raw materials such as soybeans and corn are traded on international markets and exported as animal feed livestock, such as cattle and pigs. "Rio Grande do Sul, which once had more than 1 million hectares under rice cultivation, is now struggling for 900,000 hectares," Evandro said.

In an interview with g1, Agriculture Minister Carlos Fávaro said the government will encourage the cultivation of basic Brazilian foodstuffs through option contracts in the next harvest program, which will be announced this month. Last year, however, Rio Grande do Sul expanded planting by 4%, with an eye on the rising price of a bag of rice (up 37% in a year, according to Cepea), but also in anticipation of El Niño, which could hurt harvest progress.

Globally, rice prices have risen since last July, when India stopped exporting the grain to lower domestic prices. The Indian market accounts for 35 percent of global rice trade. "Since then, Asian rice - which is an important benchmark for global prices, as Asia accounts for 90 percent of total production - has risen by 46.5 percent, followed by prices in Mercosur moving in the same direction. In Paraguay, for example, prices rose. In the case of Brazil, from last year to now, we have seen retail sales increase by around 25%," Cogo said. The analyst emphasized that "the 45% increase in dollars abroad was partially passed on to Brazil." Abroad, prices remain high and the market is now awaiting a new decision from the Indian government, which is expected to announce this month whether it will continue to block exports.