MercoPress. South Atlantic News Agency

Uruguay rice industry wants to double production

Uruguay, South America's leading exporter of rice and among the world's top eight, traditionally has been forced to sell overseas 95% of its high quality grain given the country's scarce population and low consumption.

However since the price has almost doubled in twelve months and shot another average 25% during April, prospects couldn't be better. And the industry is considering doubling the current production to two million tons. While in the rest of the world countries are rationing supplies, banning exports, trying to build stocks or having to contain food protests in Uruguay the rice sector is booming with its one million average annual tons production. For the 2007/08 season local mills have left 22.274 tons which means each Uruguayan will average an annual consumption of 7.4 kilos. In Uruguay rice production is considered one of the most advanced with the highest investment per hectare which includes selected seeds, fertilizers, herbicides, fuel, labor, equipment maintenance, pumping stations, canals, drainage, roads, bridges, dams, all of which means that a rice farmer with 150 hectares of rice had a fixed investment (at the beginning of the 2007/08 season) of over 200.000 US dollars. Out of a potential one million hectares Uruguay plants 190.000 but is mainly because of the rotation of soil since 60% of the rice crop comes from natural fields or with other cereals or pastures; only 40% of the area is repeated with rice. This means that a majority of rice crops will only repeat once every four to six years helping to increase quality and yields. Adolfo Crossa president of Uruguay's rice millers association said Uruguay must take advantage of the low world stock of rice "without too much speculation", and establish a production target of two million tons which is attainable and "excellent for the country". "The international price level is ideal, it will benefit all of us: we should capitalize the situation with common sense and not too much speculation", admitted Crossa. "Scarce rains during harvest is helping us even more so we can forecast an eight tons yield per hectare which is extremely good", he added. Harvesting is expected to end mid May. As to the international situation Mr. Crossa said that the confluence of factors that have contributed to the current price of rice are exceptional: low world stocks, demand increase, more consumers, falling value of US dollar, climate and particularly the "political component" rice has for many Asian countries. "Governments are scared and several have taken precautionary measures and banned exports to ensure stocks, which has generated an outbreak of hysteria in some places", said Crossa. He exemplified the "hysteria factor" with a US exporter who was unable to supply a local supermarket chain and overseas orders causing near panic in market operators. Similarly in Brazil, two months ago the government wanted to promote overseas sales and was giving exporters under the table subsidies, "but now they are talking of limiting exports because the Brazilian crop is barely enough for its domestic market". "As long as the leading producers and exporters such as Thailand don't open their markets the problem with persist, and it won't be overcome with the peripheral production of countries such as Uruguay or Argentina". Crossa said market experts insist that China and India could have sufficient stocks for self consumption "but are fearful of taking risks in such a volatile scenario". According to FAO food prices in the last twelve months to March 2008 have jumped 130% for wheat, 74% for rice, 87% for soy beans and 53% for corn.