Federarroz intensifies actions against collapse in the sector

Faced with one of the most adverse scenarios in recent years for the rice chain in Brazil, the Federation of Rice Growers Associations of Rio Grande do Sul (Federarroz) is intensifying its discussions with the financial system, the federal and state governments and sector entities, in search of emergency measures to mitigate the price and liquidity crisis faced by producers.

According to data from the consulting firm Safras & Mercado, the country is currently operating with an estimated surplus of 14,2 million tons, compared to an annual demand of 12,2 million tons. The projection of carryover stocks above 2 million tons — a record level — is negatively impacting prices. The scenario is aggravated by a combination of bearish factors: an increase in the cultivated area, an increase in the average productivity of crops, weak domestic demand, exports below expectations and lower international prices. All of these elements occur simultaneously and have led to a continuous decline in prices paid to producers.

In the Western Border of Rio Grande do Sul, industries are offering between R$60,00 and R$65,00 per bag with a yield above 58% of whole grains, while producers maintain orders above R$70,00. At the end of May, the state average for rice was R$73,20, representing a drop of 3,11% in the week and 39,41% in relation to the same period of the previous year, according to a survey by Safras & Mercado.

Among the ongoing actions, Federarroz is in talks with Banrisul, Banco do Brasil and Sicredi to facilitate the staggering of financing payments, seeking to offer greater breathing room to producers and contain the pressure on sales in June and July. According to the entity, Banrisul has already signaled positively to the proposal, and other financial institutions are expected to join. "It is necessary to stop the drop in market prices. The current prices make production unviable and it is essential to create alternatives so that producers do not need to sell so much product at this time," highlighted the entity's president, Alexandre Velho.

In the institutional sphere, a meeting was held on Wednesday, June 4, with the governor of Rio Grande do Sul, Eduardo Leite, with the participation of the production sector. Together with the undersecretary of the State Treasury, Ricardo Neves, Leite heard from representatives of the sector requests to seek the adoption of urgent tax measures due to the serious crisis that the rice sector is going through. According to the legal director of Federarroz, Anderson Belloli, the State Government has shown sensitivity to the serious situation that rice farmers in the State are facing. "The government has committed to seeking short-term solutions to mitigate damages to the rice sector, since the current market price does not even minimally cover production costs, without prejudice to the fact that rice farmers have also been suffering from adverse weather conditions in recent harvests," he stressed.

In parallel, there will be mobilization in Brasília (DF) with meetings next week and a meeting of sector entities with the National Supply Company (Conab), next Friday, June 6, to seek federal solutions to the profitability crisis. Federarroz also maintains ongoing contact with regional producer associations and technical guidance agendas in rice hubs, with a focus on transparency of actions and active listening to the base.