Agriculture in Rio Grande do Sul has an important participation in national production with several products, including corn, soybeans, rice and chicken and pork meat.
In addition to the effect on the countryside, the impact on logistics must also be taken into account, which was also severely affected by the heavy rains and floods that hit much of the state.
Samuel Isaak, commodities analyst at XP research, who participated this Tuesday (7) in the XP Morning Callexplained the effects on the economy of the tragedy in the south of the country.
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Harvests reached
He explained that Rio Grande do Sul accounts for 4% of corn production in Brazil, 14% of soybean production and almost 70% of rice production.
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“Most of these crops were harvested. There was a quarter of the soybean plantation to be harvested, and around a fifth of the corn and rice crops to be harvested in the state. And a large part is in the central region (of the state), in Soledade, Santa Maria and Lajeado, which was the most affected (by the rains)”, he said.
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Rice price
The analyst points out that it is very difficult to quantify the percentage of impact on the economy, but mainly sees rice as the product that should suffer the biggest shock at a national level.
“Rice is a commodity that is represented in the state. The prices of the indicator at the Instituto Riograndense do Arroz have not yet shown an upward movement, but we need to see how this evolves over the next few weeks,” she stated.
Another question raised by Samuel Isaak is that there is a lot of rice still in the warehouses, but it is not yet known whether or not they were affected by the floods.
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Soy has already risen in price
The state is also a major meat producer, nationally accounting for 12% of chicken production and 17% of pork production. “Some slaughterhouses had to stop their activities”, he highlights.
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“But our view is that mainly the rice harvest should experience a drop in production due to the rains, and prices could be impacted in the short term”, he highlights.
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In the case of soybeans, the analyst points out that on the Chicago Stock Exchange the grain rose almost 2.5% this week and 3% last week. “And part of this increase we can attribute to this expectation of a reduction in the harvest in Rio Grande do Sul”, he stated.
Impact on logistics
He added yet another critical point in the state: logistics. “The state has hundreds of blocked points on the roads. It’s a war scenario. And logistics is severely impacted,” he pointed out.
The only port still open in the state is Rio Grande (Pelotas and the capital Porto Alegre are not in operation), responsible for the export of grains and proteins. But Isaak said that the water level is expected to rise in the port terminal region, which could affect its operation.
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“There is a lot of damage that we don’t see, which is underwater. When the water level drops, more problems will appear,” she said.
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Difficult to quantify
Caio Megale, chief economist at XP, who also participated in the XP Morning Callconsidered it difficult to quantify the economic impacts of what is happening in the south of the country today.
“Rice was on a downward trend, perhaps it will turn upwards. Soybeans have a little more impact on the wholesale side and the rest will not affect inflation as much as a whole. It may have something to do with protein, but it’s too early to say. I don’t believe that the BC will include this issue as an important point in its inflation projections”, says Megale.
