Brazil Gov’t Drafts Interim Measure to Allow Rice Imports Amid Market Concerns

Carlos Fávaro, Brazil’s Minister of Agriculture, revealed on Tuesday (7/5) that his ministry is drafting a provisional measure to authorize the direct importation of up to 1 million tons of rice by the National Supply Company (Conab). The initiative seeks to curb speculative trading and prevent excessive price hikes in the market. Fávaro emphasized that the objective is not to compete with rice farmers from Rio Grande do Sul, who account for 70% of the country’s rice production.

The issuance of the interim measure is contingent upon the National Congress’s vote on the decree of public calamity in Rio Grande do Sul. Additionally, a separate provisional measure will be required to allocate extraordinary credit to Conab for the purchase of foreign rice. However, no cost estimates for the measure have been provided thus far.

According to Fávaro, the initial plan is to acquire 200 thousand tonnes of processed and packaged rice through an auction, following the publication and regulation of the provisional measure by the Ministries of Agriculture and Agrarian Development. He clarified that the rice will not be sold to wholesalers but will instead be retailed in regions across the North and Northeast, as well as rural areas nationwide.

Rice isn’t a traditional import product of Brazil. See below the import volume recorded from Jan 2021 and Mar 2024. The data is from DataLiner.

Rice Imports | Jan 2021 – Mar 2023 | TEUs

Source: DataLiner (click here to request a demo)

“The government’s intention is not to compete with struggling rice producers. We will not be purchasing for wholesale distribution; rather, our aim is to deter speculation,” stated Fávaro following a government Situation Room meeting at Palácio do Planalto. He added that swift imports would help avert disruptions and mitigate price spikes for Brazilian consumers.

“We are set to have losses in the fields and warehouses, which are flooded. The major constraint pertains to the logistics of getting the rice out of Rio Grande do Sul and taking it to consumer hubs”, explained the minister.

Fávaro highlighted that approximately 1.6 million tonnes are yet to be harvested in the current Rio Grande do Sul 2023/24 harvest, posing potential losses due to adverse weather conditions. No official estimations have been released as of yet.

Responding to objections from Rio Grande do Sul’s production sector, Fávaro assured that the measure is primarily preventive, leveraging imports from Mercosur countries under existing trade agreements, thereby exempting them from tariffs. He cited potential sourcing from Argentina, Uruguay, Paraguay, and Bolivia.

“At present, imports aim to mitigate speculation amidst existing logistical constraints,” Fávaro remarked. Prior to the floods in Rio Grande do Sul, Conab had forecasted a rice harvest of 10.5 million tons in Brazil, slightly below the country’s annual consumption of 11.5 million tons. The minister indicated that the provisional measure will authorize imports of up to 1 million tons, with adjustments based on market dynamics.

Source: Globo Rural

Click here to read the original news report: https://globorural.globo.com/politica/noticia/2024/05/governo-prepara-mp-para-autorizar-importacao-de-arroz.ghtml

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