Harvest status: Harvest is now completed and the final plots where harvested on April 5. Drying process of the production is also completed; it’s the most critical operation after harvesting a rice crop. Drying reduces grain moisture content to a safe level for storage. When rice is harvested, it will contain up to 25% moisture. High moisture level during storage can lead to grain discoloration, encourage development of molds, and increase the likelihood of attack from pests. Therefore, any delays in drying reduce grain quality and result in losses.

Based on preliminary results, around 12,200 dry tons of paddy rice have been produced for this campaign (meaning a dry average yield of 8t/has) with an average index of quality above 56%. We are pleased with those preliminary results given the dry weather conditions registered (hot and dry with very few small irregular rains). We had to face several restrictions periods of water pumping (either whole or partial) from the river imposed by the authorities. Some rice producers downstream had even to abandon part of their production due to dryness and lack of water to irrigate their fields.

Thanks to our artificial lack of 480 has and an efficient management of water, we could mitigate effects on the production.

Market situation: in response to growing concerns over the spread of COVID-19, Paraguayan authorities have announced the extension of the current home isolation order until April 19. All international borders are now closed until further notice. Only Cargo shipping will be permitted to cross the borders.

However, below normal rains in the Parana-Paraguay water basin is hampering grain transport through waterways in Argentina as the water level of the river has dropped significantly. The water level of Parana river at Puerto Rosario is barely one meter and the last time it was below one meter in this region was on January 10, 1989, according to a report from BCR (Bolsa de Comercio de Rosario).Grain carrying ships need to reduce the loading according to the level of water. (cf. Article from La Nacion dated 15/04/20).

This comes at a time of the peak harvest of corn and soybeans in Argentina. Moreover, truck movements in the country already face some issues due to restriction imposed to control the spread of COVID-19.This is not only impacting the delivery chain, but mills had also to postpone their purchase of material and producers had to stop their deliveries (sales) and stored their production (silos, in house or by 3^rd party, silo bags).

On our side, we are currently completing the delivery of contracts concluded before quarantine was declared there. Our remaining production is stored in our silos of 9,000 tons capacity. It’s a significant competitive advantage to have its own facilities to avoid growing storage costs or lost in sill bags (manipulation lost and can not store for a long time Vs in silos).

Harvest status: Despite the current challenging sanitary environment, over 1,200 has have been harvested, dried and stored in our silos. Preliminary dry average yield achieved is above 8 t/has. We are in the process to harvest the last plots (around 400 has) but the crop was still too humid to start (humidity level of 28 to 30% while 26% is targeted). Harvest should be finalized by end of March – beginning of April.

Market situation:

The Brazilian real continued to depreciate to trade above 5.1 against the USD (see chart USD to BRL below). The real has been falling since the beginning of the year to trade now at its historical lowest level due to persistent worries regarding the country’s economic growth, the impact of the coronavirus pandemic and despite central bank efforts to support the currency. The Brazilian situation has a significant impact on the Paraguayan rice market as 90% of its production is exported to Brazil. Early March, we sold 1,500 tons of paddy rice to local mills (deliveries are in progress) for USD 20 per ton more than actual price.

Water level of all rivers, including the Paraguay River (mainstream for grain shipping), are at their minimal level which generate logistic difficulties.

Social isolation is impacting custom services and trucks traffic, so that the delivery of Paraguayan products to Brazil is slower than in normal situation.

For now, we prefer to store our paddy rice in our silos waiting for more stability.

Situation/weather: After having faced some restrictions periods of water pumping (either whole or partial) due to extreme low water level in the river, the situation reveres with some dense rainfalls registered. The torrential rains which caused flooding and landslides in southeast Brazil raised also upstream water levels.

We could recover the full optimal water capacity to irrigate the remaining plots under irrigation if any natural shortage of water may arise. Fields took also benefit from direct natural irrigation.

At the entrance of the river where the pump station is located, we register now above 3.7 m of water level.

You could access there by walk 2 weeks ago so low level had reached the river as you can see below.

Production: We began to harvest our 1^st block (Block G – 281 has). Preliminary harvest results given by this area are very encouraging as yields are above 8 t/has with an index quality above 57.

We are working to improve, block by block, yields and quality. It takes time and precision in management of the plots (land preparation work, fertilization, cleaning and irrigation).

We have currently 9 harvesters operating, and our dryers are fully functioning.

We are going to harvest next block G you can see, on the opposite of block E which just has been harvested and the silo facilities.

Market: Rice producers in Itapúa region have a quite pessimistic vision for the 2019-20 harvest, due to flat market prices (around $180/t) the stagnation in the price of the product and the tariff restrictions that Brazil intends to impose on over Paraguayan rice export (a customs duty of 3% while other crops would be taxed at 9%). In addition, Brazil currency is also at a low level against the US dollar which leads to very low opening prices expectations.

Paraguayan producers are also worried about the change in administration in Argentina (exports are barged down the Parana Rive to ports in Argentina). The prior administration of Mrs. Kirchner leveed a tax on crops when they transited through Argentina and farmers are concerned that the tax will be reinstated once again under the new administration. Export taxes have already increased by them yet.

Without taking into consideration the cost of those protectionist measures, dried yields need to be at least above 7.1 t / h to cover direct production costs of rice given the current market conditions. According to our data, there are approximately 18,000 has of rice fields in Itapúa region, in the Tebicuary river basins and Tacuary and Aguapey streams. With time, only a few large producers will remain if the situation continues.

Situation/weather: We continue to experiment the same weather conditions than the last months (hot and dry with very few small rains). Due to low irregular rains, we had to face additional restrictions periods of water pumping (either whole or partial) from the river imposed by the authorities. Currently, the river is at an extreme low level as you can see.

However, thanks to our artificial lake of 480 ha we could mitigate the problem and continue to irrigate the latest fields sowed which are in the final irrigation stage. Some rice producers downstream had already to abandon part of their production due to dryness and lack of water to irrigate their fields. It’s going to be another challenging campaign for Paraguayan rice producers.

Some storms are forecasted for the 2^nd and 3^rd week of January where the related rains will help fields’ irrigation, but the forecasted rainfall will unfortunately not be enough for the river to recover. The latest 300 has sowed might be affected if the situation continues as the remaining water stored in the reservoir is not enough to cover all the needs (final irrigation stage for most of the surface sowed in stage 1 to 3 and the latest surfaced sowed).

Production: We are making some humidity tests to see if we can start with the harvest of the initial 1,250 has sowed. We have currently a humidity index of 27/28 for the plants and with 26, we will start the harvest.  8 harvesters are ready to start the process as soon as we reach the targeted level of humidity (2 harvesters are going to be added in the peak period). We will also need 3-4 days when harvesting will begin to stabilize the machines (speed rotation). Silos and dryers wait for the production (full maintenance has been performed).