We made good advances in land preparation: over 1,000 ha have been fully prepared now (tillage, land levelling, field drainage and aerial application of herbicide). Our objective for the cycle is to sow in partnership our so called “base” surface of 1,600 ha and the production will be dedicated 100% to IRGA 424 cultivation. We choose not to extend our planted surface given all market interties (slow trading activities, Brazil situation and pandemic situation).

We are going to sow again in stages this cycle and we are targeting to start the sowing of 1^st stage by August 25 (540 ha). This way we can have a harvest in stage and reduce our operating risks (weather issues and irrigation restrictions) while we will have a better control of the plots as they are not going to be all in the same stage at the same moment.

Fertilizers were delivered by our partner at farm and stored in our facilities.

We are also in the final stage of the maintenance of our water pumps. The entire process has been delayed due to the pandemic (limitation of circulation of service providers, delays to import spare parts, etc).

On 2 of the 4 big pumps at the river water pumping station (each with a 2,600 liter flow per second), power and control cables had to be replaced given the intensive use of our pumps. Those cables are key but their imports were delayed. Those pumps are going inside a pipe with those cables and have then to be installed with a tensioning steel cable to prevent movements’ function that when water creates turbulence inside the pipe, cables have no movement and they don’t hit the pipe walls.

To proceed, we need 1^st to remove the pumps from their pipes. It s a very technical process because If water reaches inferior place, pump needs to be treated in lab conditions (dismantled and all inside water needs to be removed; likely bearings will also need to be replaced). At the re-pumping station, the smaller pump there (1,600 liter flow per second) needed a much lighter maintenance, only small spare parts had to be changed. The costs of maintenance can rise very quickly if you don’t pay attention.

After having registered 10 days of dense rains, we restarted with land preparation activities. After a drought period, a small rain can helps land based work but not 10 days of continues dense rains. However, with machinery operating at full power, we will very quickly catch-up and we have already prepared over 600 ha so far. The good news, is that those rains helps the fully naturally our reservoir as we need full water capacity for the coming irrigation period of the cycle.

According to the latest weather forecasts, we should register heavier rains than it use to be for the season and that until mid august. Then, the situation should progressively reverse from September onwards (below normal, especially in the spring). Temperatures are going to follow the same trend (below average until mid August, than the averages). Experts are predicting La Niña phenomenon for this season on our region. Therefore, current rains help reducing pumping costs to fully the reservoir but will also be useful during irrigation period of the fields, and engines have to work full capacity during the days it doesn’t rain to be ready for sowing stage.

We are taking advantage of the good weather to aerial spray the fields with herbicide to control the weeds as you can see. All those work will make root penetration easier, and facilitate irrigation and drainage. It improves weeds and crop residues distribution the field so as their control, and incorporate them into the soil.

Argentina, Brazil, and Paraguay have agreed on the opening of the spillway of Itaipu plant (it’s the world largest operational hydroelectric dam) to help Paraguay and Argentina, which are suffering from a drought and having problems to transport their grain harvest on the Paraguay River.

We have begging on June 22 with initial land preparation work of the fields. This cycle, we planned to sow 1,530 ha with rice in association with a local landing seeds and agrochemical family group. We hope that you will have at least the same level of production results. For the past cycle, we have got 8t/ha as yield with an average index quality of 55. We produced over 12,000 tons of paddy rice and our silos are now empty.

In terms of sales, we notice that rice prices have well increased in May due to exports to Africa and Pakistan. The situation was driven by food securitization fear of those countries due to Covid-19 pandemic. On the opposite, Brazil almost disappears this cycle in terms of rice import from Paraguay (generally 90% of Paraguayan rice production is exported to Brazil) but they are also not exporting they own production. Covid-19 pandemic has created fear and panic on food supply chains.

We continue to follow sanitary recommendations and strict protocols to ensure our employees and contractors’ the saves work environment possible.

For now, our attention is focused on land preparation which is important to ensure that the rice field is ready for planting. It is also creating a favourable environment for the rice plants to germinate and grow.

A well-prepared field improve soil structure (better ventilation, permeability, and loosening of the root zone) to make root penetration easier, and facilitate irrigation and drainage. It improves weeds and crop residues distribution the field so as their control, and incorporate them into the soil.

All our contractors are at farm and are starting their activities after filling their machines with gas.

Paraguayan President Mario Abdo Benítez has said the spread of COVId-19 in Brazil threatens his country’s success in containing the virus. According to Mr Benítez, more than half of Paraguay’s 563 cases were people who had entered from neighbouring Brazil.

The country has spent the last 2 months under a strict lockdown, and most people with the disease are being quarantined in guarded shelters. Meanwhile, Brazil has become the worst-hit country in South America. The 2 countries share a 400 km border which is usually loosely controlled. But President Benitez decided to reinforce and militarize “the most vulnerable parts” of the border.

Mr Benítez is one of several leaders in the region who have expressed concern about Brazil’s fast-developing outbreak. Argentina’s President Alberto Fernandez has said that trade between the two countries is a risk, with truckers hauling goods south to his country from Sao Paulo, one of the most infected regions of Brazil.

Jair Bolsonaro has repeatedly said that the risk posed by coronavirus has been exaggerated, and has clashed in recent weeks with state governors who have imposed lockdowns. In Brazil, 30 requests for the dismissal of Bolsonaro were already sent to the Chamber of Deputies.

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).