MercoPress. South Atlantic News Agency

Brazil forced to import rice to help keep domestic prices down given the expected smaller crop

Brazil’s rice production is expected to shrink and the challenge will be to limit exports in order to supply domestic demand and contain domestic prices.

According to the forecast of agricultural production released by the Brazilian Institute of Geography and Statistics (IBGE), the rice crop should have a smaller harvest in 2021. The production of paddy rice should decrease 2.4% next year, to 10.8 million tons.

“The drop is related to productivity issues. But the expected volume meets domestic demand, in the range of 10.5 million to 10.8 million tons per year ”, said Carlos Alfredo Guedes, Research Manager at IBGE.

The challenge will be to keep the product in the country, since the appreciation of the dollar against the real continues to stimulate exports. “To keep this product in Brazil, it would be necessary to raise prices for consumers,” he said.

With the increase in prices this year, the federal government applied zero import tariff for paddy rice benefitting countries outside Mercosur until December 31. The reduction is restricted to a quota of 400,000 tons.

IBGE data from January to October this year show that the price of rice accumulated an increase of 59.5% on average in Brazil. In the same period, the IPCA, which measures the country’s official inflation, registered an increase of 2.22%.