Emerging Potential for Exports from South America

Emerging Potential for Exports from South America The Rice Trader World Rice Conference Cebu, The Philippines October 27-29 2009 Bruno A. Lanfranco

Instituto Nacional de Investigación Agropecuaria - Uruguay

Rice & Mercosur

Brazil • • • • •

(2008/09) Area: 8,514,877 km2 (5º) Population: 191,480,630 inhab. (5º) Rice Production: 12,634 TMT paddy (9º) Rice Exports: 750 TMT paddy (12º) Rice Imports: 800 TMT paddy (14º)

• • • •

(2008/09) Area: 176,215 km2 (90º) Population: 3,415,920 inhab. (128º) Rice Production: 1,250 TMT (28º) Rice Exports: 1,125 TMT (8º)

• • • •

(Jan-Dec 2008) Area: 2,780,400 km2 (8º) Population: 40,134,425 inhab. (32º) Rice Production: 1,200 TMT (29º) Rice Exports: 800 TMT (10º)

• • • •

(by Sep’08) Area: 406,796 km2 Population: 6,886,245 inhabitants Rice Production: 155 TMT (55º) Rice Exports: 11.5 TMT

Uruguay

Argentina

Paraguay

2

BRAZIL

2008/09 rice area: 2,908,700 has Production: 12,634,400 tons Average yield: 4,344 kg/ha Exports represent 4% of production •

1

AC

ACRE

NO

2

AL

ALAGOAS

NE

3

AP

AMAPÁ AMAPÁ

NO

4

AM

AMAZONAS

NO

5

BA

BAHÍ BAHÍA

NE

6

CE

CEARÁ CEARÁ

NE

7

ES

ESPÍRITU SANTO

SE

8

GO

GOIÁ GOIÁS

CW

9

MA

MARANHÃO

NE

10

MT

MATO GROSSO

CW

11

MS

MATO GROSSO DO SUL

CW

12

MG

MINAS GERAIS

SE

13

PA

PARÁ PARÁ

NO

14

PB

PARAÍ PARAÍBA

NE

15

PR

PARANÁ PARANÁ

SO

16

PE

PERNAMBUCO

NE

17

PI

PIAUÍ PIAUÍ

NE

18

RJ

RIO DE JANEIRO

SE

19

RN

RIO GRANDE DO NORTE

NE

20

RS

RIO GRANDE DO SUL

SO

21

RO

RONDÔNIA

NO

22

RR

RORAIMA

NO

23

SC

SANTA CATARINA

SO

24

SP

SÃO PAULO

SE

25

SE

SERGIPE

NE

26

TO

TOCANTINS

NO

27

DF

DF (includes (includes BRASILIA)

CW

(0.15% of total country exports)

3

NORTH NORTHEAST CENTER-WEST

Source: Lanfranco & Rava, based on CONAB data

SOUTHEAST

2009/10

2008/09

2007/08

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

99/2000

1998/99

1997/98

1996/97

1995/96

1994/95

1993/94

1992/93

1991/92

1990/91

1989/90

1988/89

1987/88

1986/87

1985/86

1984/85

1983/84

1982/83

1981/82

1980/81

1979/80

1978/79

1977/78

1976/77

Area (millions of hectares)

evolution of rice area

7,0

+50% fallen in 30 years, under 3 million has since 2006/07

6,0

5,0

4,0

3,0

2,0

1,0

0,0

SOUTH 4

rice area by region 2008/09 season: 1.29 million has in the South region, 1.10 million located in RS

2009/2010

1979/1980 SO

4% 18% 21%

SE CW

15%

13%

45%

3% 15%

NE

42%

25%

NO 6.4 million hectares

2.9 million hectares


5



SOUTHEAST

2009/10

2008/09

2007/08

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

99/2000

1998/99

1997/98

1996/97

1995/96

1994/95

1993/94

1992/93

1991/92

1990/91

1989/90

1988/89

1987/88

1985/86 1986/87

1984/85

1983/84

1982/83

1981/82

1980/81

1979/80

1978/79

1977/78

1976/77

Prodution (million tons)

evolution of rice production

16,0

South region is main responsible for increase in rice production

14,0

12,0

10,0

8,0

6,0

4,0

2,0

0,0

SOUTH 6

rice production by region South production went from 2.5 MMT in 77/78 to almost 9.1 TMT in 09/10

1977/1978

2009/2010 SO

7%

4% 33%

20%

9%

SE

10%

CW 15%

28%

NE

2% 72%

NO 7.3 million tons

12.2 million tons


7



SOUTHEAST

2007/08 2008/09 2009/10

2002/03 2003/04 2004/05 2005/06 2006/07

1998/99 99/2000 2000/01 2001/02

1993/94 1994/95 1995/96 1996/97 1997/98

1988/89 1989/90 1990/91 1991/92 1992/93

1984/85 1985/86 1986/87 1987/88

1979/80 1980/81 1981/82 1982/83 1983/84

1978/79

6,0

1976/77 1977/78

Produtivity (kilos por hectare)

evolution of rice yields

7,0

Yields in the South annually grew at 3.0% cumulative since 76/77

5,0

4,0

3,0

2,0

1,0

0,0

SOUTH 8

2008/09 yields by region More than doubles yields of other regions

Productivity (kilos per hectare)

8000 7000 6000 5000 4000 3000 2000 1000

2,464

1.530

2.995

2.593

7.018

0

NORTH

NORTHEAST

CENTER-WEST

SOUTHEAST


SOUTH 9

production & consumption 14,0 Brazil would be unable to satisfy a stable local consumption since 2004/05

Millions of Metric Tons

13,5

12.95

13,0 12,5 12,0

12.21

11,5 11,0 10,5 10,0 2000/01

2001/02

2002/03

2003/04

2004/05 Production

2005/06

2006/07

Consumption


2007/08

2008/09

2009/10

10

evolution of public stocks 6.000

Public stocks at minimum level since May 2005

Thousands of Metric Tons

5.000

4.000

3.000

September 2009 = 67.6 TMT 2.000

1.000

Jan-87

Jan-89

Jan-91

Jan-93

Jan-95

Jan-97

Jan-99

Jan-01

Jan-03


Jan-05

Jan-07

Jan-09

11

variation of total stocks 4.000

Total rice stocks falling by fifth consecutive year, < 500 TMT after 2009/10 3.500

Thousands of Tons

3.000

2.500

Rice stocks continue falling

2.000

1.500

1.000

500

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Initial

Final


12

evolution of imports & exports Thousands of Tons Paddy Equivalente

1.800

Looking for auto-sufficiency, back to net importer condition in 2008/09

1.600 1.400 1.200

900 TMT

1.000 800 600 400

500 TMT

200 0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Imports

Exports


13

supply & demand 2009/10 18,0

Brazil will reduce exports and increase rice exports in 2009/10 16,0 14,0

0,47 0,50

0,90

Final Stock

Millions of Tons

12,0

Exports 10,0

Consumption Imports

8,0 12,21

12,95

6,0

Production Initial Stock

4,0 2,0 0,0

0,82 Supply

Dem and


14

2009 exports by destination By August 31, 2009 Africa accounts for 69% of volume & 71% of FOB value Destination

Kilograms

US$/ton

US$ FOB

% U$S

Benin

75,834,559

528

40,057,270

19.64

Nigeria

60,313,645

523

31,547,973

15.47

South Africa

54,752,112

528

28,901,068

14.17

Senegal

61,576,419

272

16,748,848

8,21

Venezuela

30,089,976

428

16,307,047

8,00

Switzerland

46,316,435

238

11,007,667

5.40

Gambia

29,618,509

299

8,866,045

4.35

Cameroon

16,616,720

533

8,861,904

4.35

Angola

10,461,863

588

6,149,801

3.02

8,208,000

571

4,684,495

2.30

Others (51 countries)

61,362,949

502

30,802,206

10.03

Total 2009 (Jan 1 - Aug 31)

463,151,187

440

203,934,324

100.00

Russian Federation

Source: Lanfranco & Rava, based on Brazil’s official customs data

15

2009 exports by product By August 31, 2009 Parboiled white rice accounts by 51% of exported volume; broken rice is 20% Product

Kilograms

US$/ton FOB

267,959,000

541

144,961,639

57.9

Parboiled

219,349,295

535

117,392,061

47.4

Not Parboiled

48,609,705

567

27,569,578

10.5

15,417,527

559

8,616,449

3.3

Parboiled

15,024,201

550

8,270,408

3.2

Not Parboiled

393,326

880

346,041

0.1

149,852,701

270

40,394,957

32.4

29,921,959

333

9,961,279

6.5

463,151,187

440

203,934,324

100.00

Milled

Brown

Broken Paddy Total (Jan-Aug)

US$ FOB

Source: Lanfranco & Rava, based on Uruguay’s official customs data

% Vol.

16

2009 imports by origin By August 31, 2009 Mercosur accounts for 99.7% of volume & 98.9% of CIF value Destination

Kilograms

US$/ton

US$ FOB

% Vol.

Uruguay

201,114,720

385

77,449,213

46.31

Argentina

153,273,906

410

62,783,990

35.30

Paraguay

78,572,310

316

24,799,398

18.09

Italy

888,175

1,625

1,444,560

0,20

United States

137,034

1,425

195,326

0,03

Thailand

158,708

492

78,084

0.04

France

24,480

2.501

61,227

0.01

Spain

20,000

2,881

57,617

0.005

India

28,593

1.658

47,416

0.01

Chile

25,000

850

21,250

0.01

1,820

748

1,362

0.0004

434,244,746

384

166,939,443

100.00

Others (4 countries) Total 2009 (Jan 1 - Aug 31)

Source: Lanfranco, based on Brazil’s official customs data

17

2009 imports by product By August 31, 2009 Not parboiled white & brown rice are the main imported products (96%) Product

Kilograms

Milled

US$/ton FOB

US$ FOB

% Vol.

231,690,448

440

101,890,098

53.4

Parboiled

7,785,160

423

3,294,603

1,8

Not Parboiled

223,905,288

440

98,595,495

51,6

153,520,545

334

51,227,469

35,4

Parboiled

192,500

1,589

306,005

0.04

Not Parboiled

153,328,045

332

50,921,464

35.3

1,135,000

176

200,263

0.3

47,898,480

284

13,621,613

11,0

434,244,746

390

166,939,443

100.00

Brown

Broken Paddy Total (Jan-Aug)


18

price of paddy rice in Brazil 40

CEPEA/ESALQ/BM&FBovespa

40

Rice Index falling after peaking in October 2008 35

35

30

30 R$ / 50-kg bag

25

25

20

20

15

15

10

10 US$ / 50-kg bag 5

0

0

9/ 1/ 0 12 5 /1 /0 5 3/ 1/ 06 6/ 1/ 06 9/ 1/ 0 12 6 /1 /0 6 3/ 1/ 07 6/ 1/ 07 9/ 1/ 0 12 7 /1 /0 7 3/ 1/ 08 6/ 1/ 08 9/ 1/ 0 12 8 /1 /0 8 3/ 1/ 09 6/ 1/ 09 9/ 1/ 09

5

19 Source: Lanfranco & Rava, based on CEPEA data

main issues for Brazil 2010

More participation in world market derived in difficulties for self-sufficiency

Brazil is changing export profile (58% of exported as milled rice in 2009)

Consolidating Africa as main destination(69% of volume & 71% of FOB value)

Low stocks force increasing imports in 2010 (Imp: 900 TMT; Exp: 500 TMT)

Key variable affecting S&D balance sheet is the exchange rate (R$/US$)

Projected rice area for 2009/10 is expected to fall by -0.4% with respect to previous year (from 2.91-2.90 MHA)

Rice production in 2009/10 is expected to fall 3-5% (12,634 to 12,206 TMT

The yields may still grow but the area finds difficulties for expansion (water)

The engine is RS: 38% area; 62% production; 93% exports (SO: 44%; 71%; 99%) so, the recovery of water reservoirs in western RS is essential

Several non-irrigated rice areas were substituted by soybeans in other states (MS 10.1%, MG 9.35%, MT 1.25%) 20

URUGUAY NORTH

CENTER

2008/09 Season Region

Area (th has) (%)

Production (th tons)

Yield (kg/ha)

North

29.7

18.5

241.8

8,156

Center

36.0

22.4

138.5

8,151

East

95.0

59.1

906.9

7,953

160.7

100

1,287.2

8,012

TOTAL

Source: Lanfranco & Rava, over MGAP & ACA

Average 1998/99-2008/09 Minor Areas 0.4% North 20.9%

East 57.1%

EAST Rice exports represent 8.58% of total exports

Center 21.6%

21

area, production & yields 9.000

1.400

8.000

1.200

7.000 1.000 6.000 800

5.000

600

4.000 3.000

400 2.000 200

0 1930/31 (*)

1.000

1950/51

SUPERFICIE

1970/71

PRODUCCION

1990/91

0 2009/10(**)

RENDIMIENTO

Source: Lanfranco & Rava, based on Rice Growers Association of Uruguay (ACA) data

22

Rendimiento (kg/ha)

Area (thousand has) - Production (thousand ton)

Yields growing at 2.7% annual cumulative since 1963/64

Source: Lanfranco & Rava, based on Rice Growers Association of Uruguay (ACA) data

2008/09

2007/08

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

1999/00

1998/99

1997/98

1996/97

1995/96

1994/95

1993/94

1992/93

1991/92

1990/91

1989/90

1988/89

1987/88

1986/87

1985/86

1984/85

1983/84

1982/83

1981/82

1980/81

1979/80

U S$ per 50 kilo bag

evolution of producer price

18

Total price received by farmers, including devolution of export taxes

16

14

12

10

8

6

4

23

Uruguay in 2010 world ranking Uruguay shares 8th place with Cambodia, with 1.35 million tons paddy rice equivalent #

Exporter

Processed Rice (tons)

%

1

Thailand

10,000,000

34.5

2

Vietnam

5,500,000

19.0

3

Pakistan

3,300,000

11.4

4

United States

3,070,000

10.6

5

India

1,500,000

5.2

6

China

1,300,000

4.5

7

Myanmar

1,000,000

3.4

URUGUAY

800,000

2.8

Cambodia

800,000

2.8

10

Argentina

600,000

2.1

11

Egypt

500,000

1.7

12

Others

1,731,000

2.2

27,616,000

100.0

8

Total Estimated for 2008/09

Source: Lanfranco, based on USDA-FAS data, October 2009

24

2009 exports by destination By October 21, 2009 IQ-BR-PE accounts by 67% of both volume & FOB value; EU accounts for 11 % Destination

US$ FOB

%

Kilograms

US$/ton

Iraq

253,964,690

478

121,468,967

32.54

Brazil

255,084,489

389

99,263,516

26.59

Peru

58,794,996

521

30,602,801

8.20

Turkey

39,823,700

542

21,574,065

5.78

United Kingdom

30,688,424

466

14,299,000

3.83

Germany

19,136,685

558

10,672,736

2.86

Côte d’ d’Ivoire

28,347,031

376

10,671,566

2.86

Senegal

26,739,661

317

8,489,657

2.27

Russian Federation

10,644,500

552

5,875,694

1.57

Belgium

14,794,825

348

5,154,931

1.38

Others (50 countries)

99,544,008

454

45,231,345

12.12

Total 2009 (Jan 1 – Oct 21)

837,563,006

446

373,304,578

100.00


25

EU became a key market EU-27 went from US$ 3.6 million (1996-2005) to US$ >100 million (projected 2009) 120

Millions of US$

100

80

60

40

20

0 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006


2007

2008

2009 26

2009 exports by product By October 21, 2009 Not parboiled white & brown products account by 75% of volume and 84% of value Product

Kilograms

Milled

US$/ton FOB

US$ FOB

% Vol.

574,885,121

484

278,199,275

68.6

Parboiled

21,816,381

581

12,673,991

2.6

Not Parboiled

553,068,740

480

265,525,284

66.0

157,064,973

412

64,639,504

18.8

Parboiled

32,330,275

538

17,379,823

3.9

Not Parboiled

124,734,698

379

47,259,681

14.9

Broken

81,396,009

301

24,527,044

9.7

Paddy

24,216,906

245

5,938,742

2.9

837,563,009

446

373,304,565

100

Brown

Total (Jan-Aug)


27

2009 export price by product 2009 export prices below 2008 levels, still high in historical terms

600

581 538

500

480

FOBUS$ per Ton

400

379 300

301 245

200

100

0 White Parboiled

White Not Parboiled

Brown Parboiled

Brown Not Parboiled

Broken


Paddy

28

main issues for Uruguay 2010

Only net exporter country in South America, 8th in world ranking

Pricing system by private agreement between growers and millers (1959)

Polished rice occupied 3rd place in 2009 total exports ranking (5.39%)

Marginal consumption (12 kg/pc; 38 TMT milled), 90% is exported

Paddy exports may attain 1.25 million tons (800th tons processed rice)

EU is a key market now capturing 12% of exports (will surpass US$ 100:)

Area fell 6% due climate but yields at historic high (8,000 kg/ha)

Producers will difficulties in achieving 170th hectares in 2009/10 season (due problems to refill water reservoirs) out of potential 200-220th hectares

BMP for “Natural Rice” product (rotation, low chemicals) could be certified?

Studies conducted by INIA support non-GM strategy if EU & Brazil stay out

Final 2007/08 price @ US$ 16.41; provisional price 2008/09 @ US$ 11.77

Current production costs @ US$ 1,600 (need yields >7,500 kg/ha) 29

Argentina Formosa Chaco Corrientes Entre Ríos Santa Fe

3% 3% 13% 41%

40%

Corrientes and Entre Ríos are the relevant regions with 80% of the area 30

evolution of rice area 350

Corrientes & Entre Ríos consolidating 70-80th hectares each

250

200

150

100

50

Entre Ríos

Corrientes

Santa Fe

Chaco

*)

9 20

09

/1

0(

//0 20 08

/0 8 20 07

/0 7 20 06

/0 6 20 05

/0 5 20 04

/0 4 20 03

20 02

/0 3

/0 2 20 01

/0 1 20 00

/0 0 19 99

/9 9 19 98

/9 8 19 97

/9 7 19 96

/9 6

-

19 95

A re a ( T h o u s a n d s o f H e c ta re s )

300

Formosa

Source: Lanfranco & Rava, based on data from ACPA & BCER, Argentina

31

evolution of production 1.800

Production 2008/09 estimated at 1.20 million tons

Production (Thousands of Tons)

1.600

1.400

1.200

1.000

800

600

400

200

1995/96 includes Misiones (980 has) 1996/97 includes Misiones (900 has) & Salta (180has)

0 1 99 5 /9 6

199 7/ 98

1 99 9 /0 0

E ntre Ríos

2 00 1/ 02

Corrientes

20 0 3 /0 4

Santa F e

F orm osa

2 005/0 6

Chaco


20 0 7/ 08 32

evolution of yields 8,000 7,500

National average 2008/09 estimated at 6,657 each kg/ha Corrientes & Entreyield Ríos for consolidating 70-80th hectares

Yields (kilograms per hectare)

7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04

Entre Ríos

Corrientes

S anta Fe

2004/05 2005/06 2006/07 2007/08

Chaco

F orm osa


33

evolution of official FOB prices 80 0

In nominal terms, 2009 prices slightly above 2nd half of 1998 70 0

Official FOB Price (US$/ton)

60 0

50 0

40 0

30 0

20 0

10 0

0 19 9 3

1 9 94

1 99 5

199 7

P addy

19 98

Brown

2 00 0

20 0 1

W hite