Argentina boosts rice production
November 01, 2008
by World Grain Staff
In the Argentine province of Corrientes, a major project promoted by three companies is aiming to significantly increase the country’s rice production. Argentina’s optimum conditions for rice-growing — such as its water availability, favorable weather conditions and energy sources near the plantations — have attracted a $55 million investment from Copra, Pilagá and Tupantuva to cultivate rice in Corrientes, one of the largest rice-growing areas in the country.
"Ayuí Grande" is a hydro-farming project concentrated in the city of Mercedes, which plans to reach annual production of 121,250 tonnes of rice by 2010 and will require 18,000 hectares of cultivated area. Also, to ensure its water supply, the three companies will build a dam along the Ayuí Grande River, 47 kilometers from the Iberá natural reserve.
Tupantuva and Copra are companies owned by the Aranda family, which is the main shareholder of the Clarín Group, the major media company in Argentina. Pilagá, which recently received a $31 million loan from the Inter-American Development Bank to refinance its debt and expand its agricultural investments, is owned by Adecoagro, which owns 250,000 hectares of land in Argentina, Brazil and Uruguay.
"The company will enlarge by 9.7% the total cultivated area for rice in Argentina," Adecoagro’s Walter Cardozo told World Grain. According to the Secretariat of Agriculture, Stockbreeding, Fishing and Food of Argentina (SAGPYA), the 2007-08 rice harvest in Argentina amounted to 1.25 million tonnes and the cultivated area for rice was 185,000 hectares.
Cardozo said the Ayuí Grande project would be finished by the 2009-10 harvest. "However, rice is only the first step toward a bigger goal that includes adding corn, soy, wheat and sorghum plantations," he said.
Hugo Müller, president of the Pro-Arroz Foundation, told World Grain the investment is motivated by several competitive advantages that Argentina counts on for the rice business, such as "wide availability of water sources, production areas located by the main rivers, non-expensive land, power plants near the growing areas, optimum agroecological conditions, tax advantages to export to other countries in the MERCOSUR, technological development and qualified human resources."
Müller said it’s important to note that global demand for rice, most of which is produced in Asian countries, is increasing at a high rate.
The Ayuí Grande project actually started over a decade ago but was delayed due to the economic crisis that Argentina went through in 2001 and 2002. Last year, the companies decided to restart it, and they are now waiting for the Provincial Legislature’s authorization to begin operations. The project already received support from half of the legislature when the Provincial Senate granted it half a sanction during the Aug. 29 session and also declared the Ayuí Grande project "of legislative interest."
To get the necessary support, the company presented an Environment Impact Study to the Corrientes Institute of Water and Environment. According to a release from the institute, the firm will create "ecologic and protection corridors." It will also constantly monitor the quality of the water extracted by the dam and take strict precautions in handling agrochemicals.
In Argentina, the rice-growing areas are highly concentrated in the Litoral region, mainly in the provinces of Entre Ríos and Corrientes, which accounts for around 90% of domestic rice production. Other rice-growing provinces are Santa Fe, Chaco and Formosa. The internal market demands approximately 300,000 tonnes a year, or about 24% of annual Argentine production. And two major companies, Molinos Río de la Plata and Adecoagro, account for 35% of Argentina’s rice production.
According to the Association of Rice Growers of Corrientes (ACPA), the province of Corrientes represented 78,749 hectares, amounting to 42.5% of the country’s complete harvested area, in the 2007-08 harvest. In this province, there are four different rice-growing areas. The city of Mercedes, where the Ayuí Grande project is going to be concentrated, along with others like Curuzú Cuatiá and Monte Caseros, belong to the South East region, which has the greatest potential for production growth.
There appears to be tremendous potential for growth in Argentina’s rice export business. According to the National Service of Farm Health and Quality (SENASA), rice exports during the first quarter of 2008 totaled 86,018 tonnes, valued at $12.348 million. That figure represents a 7% growth in volume and a 55% jump in monetary value, compared to the same period of 2007. Brazil was the primary destination in January-April 2008, importing 49,162 tonnes of Argentine rice, valued in $19.205 million. SENASA also certified exports to Chile for 19,940 tonnes and $8.358 million for the first quarter of 2008.
During the same period, Bolivia imported 220 tonnes of rice for $106,000. Another distinguished player in the country’s rice export business is the firm Calimboy SA, a rice producer pioneer in exporting to non-traditional markets for Argentina such as the European Union, Middle East and South Africa.
RICE GROWING TRENDS
The III Forum of Perspectives on Rice in Argentina was held in 2007 in the city of Concordia, in the Entre Ríos province, where experts discussed different aspects of this market in Argentina and its future development. Conclusions were optimistic. For the 2011-12 harvest, Argentina’s rice production is expected to increase by more than 10% to reach 1.4 million tonnes, with a total cultivated area of 200,000 hectares destined for rice planting. The internal market demand is expected to reach 514,000 tonnes, with rice exports reaching nearly 900,000 tonnes.
As for longer-term projections, it was estimated during the forum that rice cultivation area would increase to 250,000 hectares during the next 10 years, resulting in a record output of 1.9 million tonnes for the harvest of 2017-18. The domestic market consumption during the next 10 years was estimated at 560,000 tonnes, while exports were estimated at 1.4 million tonnes. Experts said these projections were subject to the development of all the factors affecting the local rice sector, such as the state’s role in providing better conditions for infrastructure and guaranteeing a foreseeable scenario for prices, therefore improving the conditions for potential investments. Also, they noted that perspectives offered at the forum will be influenced by the evolution of the price of other grains, especially soybeans and corn, which compete with rice production for cultivating area in the main agricultural provinces of Argentina.
Cristina Kroll is a freelance writer based in Buenos Aires, Argentina. She can be reached at email@example.com.
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