In the last days, the rice storage, of one of the basic products of the family basket, has been evidencing the tire and tug of war between the Government and the rice union for the future of the incentive that covers the grain since 1997.
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In a letter sent by the National Federation of Rice Producers (Fedearroz), the Minister of Agriculture is asked, Jennifer Mojica, summon the National Rice Council as soon as possible, in order to define the conditions under which it will operate the grain storage incentive for the harvest of the second half of 2023.
However, to date, according to the union, the definition in this regard by the Agriculture portfolio is still pending.
In general terms, the objective of this incentive is to finance the storage of surpluses that occur in the April and May harvest, which is the largest in the country, “with the task of guaranteeing rational levels of grain marketing and avoid a bankruptcy that would directly affect the producer”, highlights the Federation.
However, the debate revolves around the definition of how much the incentive will be and how much rice will be stored this year.
Based on estimates of fedearrozduring the second half of this year it will be necessary to store about 275,000 tons of dry pady rice, which will serve to guarantee the demand for the grain in the first half of next year, when the smallest harvest comes out.
The cost of this storage is estimated at an average of $51,000 per ton, which would represent an investment of about $61,000 million, “considering that the incentive must operate between the months of August and December,” explains Fedearroz.
Additionally, the union explained that when analyzing the period from April 1 to the first week of June 2023, the decrease in prices has been around 12%, taking into account that not only are production costs being covered, which will remain volatile due to the different macroeconomic and geopolitical movements worldwide.
It should be noted that Fedearroz attributes the good behavior of production to guarantee food safety.
It should be noted that Fedearroz attributes the good behavior of production to guarantee food safety.
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the positions
According to the Minister of Agriculture and Rural Development, Jhenifer Mojica, The discussion has already begun regarding the determination of the storage incentive with Fedearroz, the boards, the regional chapters and even with producers who have been delegates from the different rice regions.
However, he explained in the middle of a round of questions that “this is a mechanism that has been going on for many years, in which it has not been possible to meet the needs generated by unplanned rice plantings. So it cannot be that every two years we are in the same story of an overharvest”.
The head of the portfolio added that “from the Ministry we are going to do everything necessary to relieve the producers who are our concern, but we are not going to continue stimulating an incentive that has not solved anything. We have to transform it into a joint effort”.
To its turn, Rafael Hernández, CEO of Fedearroz, He told Portafolio that the Ministry says that 7 tons of rice must be saved and offers $7,000 million.
“If there is no incentive to remove part of the harvest from the market, there could be a very big setback for farmers and a disincentive to producers who stop planting may be presented in the following harvests,” he said.
Rafael Hernández, president of Fedearroz.
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Besides, Andrés Valencia, former Minister of AgricultureHe assured that the storage incentive is the only instrument that exists today in agricultural policy that allows cushioning the fall in cereal prices.
“The Ministry has to monitor rice prices from August-September this year to see how much they will fall, because they will surely do so. It will have to analyze the closing of inventories and the supply of the first half of 2024. It is likely that imports from Peru and the United States will arrive, ”he said.
Rafael Hernández highlighted that if child phenomenon, there may be a decrease in the supply of food, a fact that would discourage producers who will have to offer rice at a lower price.
“If there is an oversupply, the only consequence is for businessmen. The Government thinks that this is going to cause a drop in prices and inflation is going to be controlled”, he concluded.
And if an agreement is not reached with the incentive?
in accordance with Alberto Mejía, president of the Board of Directors of Fedearroz, The importance of this incentive lies in the support that the Government gives to producers to reduce the negative impact that rice surpluses bring, which is why the price of cereal falls.
“In the event that the incentive is not given, rice production in the country remains free on the market, to the point where the industry lowers the price due to excess supply,” said the manager.
In addition, he explained that lowering the price means that producers and farmers worked at a loss on the operation. “There will not be a price that is in line with the producers’ production costs, a lot of money will be lost and there will be a very critical situation,” he said.
DIANA K. RODRIGUEZ T.
Journalist Portfolio
