Uruguay processing industry suffers as paddy rice exports surge over high costs

Uruguay’s rice sector is facing challenges due to the country’s high-cost structure, which is 25 to 30% more expensive than other countries. As a result, many producers are opting to export paddy rice, bypassing the local processing industry. Therefore, this year, 40% of the rice harvest could be sent abroad in this manner.

In a country that has around 500 producers and ranks among the first in the world in this type of export, according to the National Institute of Agricultural Research of Uruguay (INIA), businessmen in the sector question the lack of competitiveness and the high values of production, which they estimate at US$2,000 per hectare.

In this context, Alfredo Lago, president of the Association of Rice Producers (ACA), highlighted the sector for “an almost unbeatable efficiency” regarding productivity and quality in dialogue with the newspaper La Mañana. However, he admitted there are “idle industrial plants” and attributed this to “high production costs.”

Uruguay currently exports rice to over 60 countries. Due to the loss of competitiveness, direct sales of unprocessed rice from the farm to other countries have become more profitable for producers. Interestingly, rice is one of the crops expected to be less affected by extreme drought, as it is poorly irrigated. Optimistic estimates suggest that the harvest may again exceed 9,000 kilos per hectare.

In light of the increasing trend of direct farm-to-abroad sales, Lago questioned the government and compared the current situation to when not even a kilogram of unprocessed rice could leave Uruguay. While he acknowledged the current administration’s increased vigilance, he emphasized the need for a change in macroeconomic policy and expressed concerns about Uruguay becoming overly dependent on commodity exports.

Source: Planeta Arroz

To read the original news report, please see: https://planetaarroz.com.br/uruguai-custos-podem-levara-a-40-da-safra-exportada-sem-processamento/

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