Brazil Rice: Traders Benefit From Mexico’s Tax Exemption


Feb 16, 2023 | Agricultural Markets News

Reading time: 2 minutes

Except for Asia, Brazil is the largest producer and consumer of Rice. Its yearly production totals some 15 million tons of un-milled Rice to meet the consumption needs of 12.14 million tons. The country is part of Mercosur (Southern Common Market), along with Argentina, Paraguay, and Uruguay. This economic bloc has an average annual supply of over 20 million tons of Rice (husk base), of which 7 million tons are aimed at exports to other or intra-bloc countries.

Of the Brazilian crop, around 75% – or 9 million tons – is harvested in the south of the country, in Santa Catarina and Rio Grande do Sul, in a subtropical climate. An irrigation crop cultivation system is used, with an average yield of 7.5 million kilograms per 10,000 m2. The cereal for export originates entirely from this region. The rest of the national harvest, cultivated in other areas, is geared towards domestic consumption. Almost 40,000 farmers grow close to 24,000 km2 per year in 500 municipalities. The southern region is home to 25,000 Rice farmers in more than 200 municipalities.

The USDA reduced the forecast for Rice planted area for MY 2022/2023 to 1.53 million hectares (ha) from its previous forecast of 1.58 million hectares (ha). This adjustment is based on the continued loss of profitability of Rice crops in Brazil and high maintenance costs, especially for irrigated fields, which make up more than 90 percent of the estimated Rice grown in Brazil, according to the National Supply Company (CONAB). For MY 2021/2022, The USDA maintained its estimated Rice planted area at 1.62 million hectares, a decrease of 3.8 percent from the previous season, confirming the downtrend.

For MY 2022/2023, the USDA increased the forecast for milled Rice production to 7.2 million metric tons (MMT) of milled Rice equivalent (MRE) (an equivalent of 10.62 MMT of paddy Rice) from its previous forecast of 7.1 MMT milled Rice. Despite the readjustment, this represents a 1.4 percent drop from the 2021/2022 production. The Agency forecasts MY 2022/2023 Rice yield at 6.94 MT/ha, more than 4.8 percent higher than the previous forecast. Irrespective of the continued decrease in harvested area, Rice remains a staple food product in Brazil. A traditional grain, especially for long-lasting Rice-planting families in the state of Rio Grande do Sul, where it is mainly grown. Rough production of paddy Rice for MY 2021/2022 is estimated at 10.73 MMT (equivalent to 7.3 MMT milled Rice), based on continued technology, resulting in 6.62 MT/ha yields for that marketing year.

Brazil’s largest Rice-producing state, Rio Grande do Sul, responsible for almost 72 percent of national production – according to estimates made by CONAB – is struggling with droughts and low reservoir levels in essential regions. Most crops are in the vegetative and reproductive development stages, but some crops no longer have water for irrigation, which may lead to significant losses. The USDA contacts indicate that some farmers are already abandoning crops to avoid more significant financial losses. Of the harvests not affected by lack of water, crops show good health. 

Brazilian Rice Shipment

The USDA increases the MY 2022/2023 Rice export forecast to 1.1 MT, from the previous estimate of 900,000 MT, based on the continued interest for Rice in international markets and the favorable prices of the grain over the exchange rate. Also, the Agency maintains its forecast for Rice import for MY 2022/2023 at 850,000 MT, based on the steady supply and trade with Brazil’s Mercosur neighboring countries.

Brazilian Rice exporters profited from the favorable exchange rate and the tax exemption adopted by Mexico, which opened a market of almost 500 thousand tons of Brazilian Rice to that country throughout 2022, taking away a large percentage traditionally exported from the United States to its neighbor.

Other sources: BRAZILIAN RICE

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