SCOTTSDALE, ARIZONA, U.S. — While the El Niño was a benefit for RiceBran Technologies in the U.S. state of California, it struck “with a vengeance” in Brazil, leading to perhaps the worst rice conditions in 60 years, said John Short, chief executive officer.

In an Aug. 11 conference call with analysts to discuss second-quarter results, Short said the area of Brazil where RiceBran’s operations are located and where most of the rice is grown suffered the worst flooding since 1940. RiceBran’s Brazilian segment consists of the consolidated operations of Nutra SA LLC (Nutra SA), whose only operating subsidiary is Industria Riograndens De Oleos Vegetais Ltda. (Irgovel), located in Pelotas, Brazil.

“That flooding wiped out 30% of the rice crop in Brazil,” Short said.

As a result of the lower harvest, he said the price of raw rice bran in Brazil has skyrocketed, to more than double what it was at the same time last year.

“If you look at the amount of rice that is being milled, it’s more than half the amount that was being milled last year at this time, but it’s less than the 70% that you would expect based on the reduction of the crop losses from the weather-related patterns from the flooding,” he explained. “So we really have a supply problem and many rice mills are suffering badly because you know what’s happening to us as a large industrial plant that can only operate at a fraction of its capacity, you’re trying to absorb the cost of the entire plant into a much smaller amount of product running through, rice mills are having the same problem.”

As a result, the entire rice industry in Brazil is “suffering significantly,” Short said.

“Our problems are exacerbated by banking issues and working capital issues as well, because as we completed our expansion, the investment we made to get the plant to 300-plus tons a day, you had a situation where the banks are generally experiencing big losses and reducing their portfolios across the board,” he said. “So funding is a challenge in Brazil and that combination of the weather-related issues that have specifically impacted the rice industry combined with working capital put the business in a very difficult situation.”

In the second quarter ended June 30, RiceBran Technologies sustained a loss of $8.116 million, which compared with a loss of $3.958 million in the same period a year ago.

Consolidated revenues for the second quarter totaled $10.5 million, down from $11.4 million in the same period a year ago. The decrease in consolidated revenue was due to a 61% quarter-over-quarter decline in revenue from the company’s Brazil segment, partially offset by a 27% increase in revenue from the USA segment, which rose to a record $8.8 million in the quarter. Brazil segment revenue was negatively affected by a decrease in bran processing levels as well as a 12% quarter-over-quarter decline in the average Brazilian real versus U.S. dollar exchange rate.