Rice growers protest: fear for the future of the sector if there is no agreement on rice floor prices and storage incentive

This morning, hundreds of rice growers from Casanare, Meta, Norte de Santander, Tolima, Huila, and La Mojana protested peacefully in front of the Ministry of Agriculture, in the city of Bogota, to demand solutions to the lack of agreement on the storage incentive and the setting of floor prices for rice producers. At present, a meeting is being held at the Ministry where the issue is being discussed.

With these measures, they can dry and store the rice they produce at lower costs for later marketing and guarantee minimum purchase prices for their product. This not only prevents damage to the rice crop – the rice begins to “burn” if it is not dried within 48 hours of being cut – but also guarantees the supply of Colombian rice to the national market throughout the year.

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At first, the Minister of Agriculture and Rural Development, Jhenifer Mojica, said that rice growers were unduly increasing plantings, which would affect the stability of the sector.

The Ministry also questioned the appropriateness of the storage incentive, for which it made available 20 billion pesos this year, arguing that it had not been successful and was called to be replaced by structural measures.

In a June 21 statement, the portfolio said that the “incentive was a temporary measure, which eventually became permanent, but after authorized studies, it was shown that for almost 30 years, it did not serve as an instrument to plan sowings and organize grain production levels”.

“Consequently, we reiterate the intention to agree with the representatives of the sector on a common path, as the discussion cannot be held solely in terms of the incentive, but must move towards the construction of a public policy for the rice sector that will fundamentally benefit producers”, the statement added.

In view of this situation, Fedearroz and Dignidad Arrocera, two unions of the sector, explained that the higher sowings in the first half of the year are due to the seasonality of the crop and do not respond to an irresponsible increase in sowings.

Likewise, they stressed that the adoption of structural measures -such as the construction of irrigation districts- takes time, so the storage incentive is key even if the country decides to work on its implementation, a decision they have been asking for years.

The storage incentive is a subsidy paid to companies, especially millers, for drying and storing rice produced in the first half of the year.

In exchange, they commit to floor prices, which benefits all producers. This is because the floor prices for rice guarantee that the grain will not be purchased at prices below production costs by the companies participating in the program, a fundamental issue in times of high inflation and particularly high prices for the supplies required by the sector.

Although the Minister of Agriculture changed her position and expressed her willingness to negotiate the storage incentive, the different actors in the sector did not reach an agreement at the technical round table held yesterday.

The core of the matter is that it has not been possible to reach an agreement on the value of the storage incentive to be paid per dried and stored ton, nor on the figure at which the rice floor prices will be fixed.

Following the government’s hesitation, producers fear that the milling industry, which has the greatest capacity to provide the drying and storage service, will lose interest in the incentive and will not commit to floor prices for rice.

Without these floor prices, next year’s plantings could drop, since producers could lose confidence in the possibility of selling their rice with a minimum profit margin, which would prevent them from losing money.

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What is behind the discussion on the storage incentive and rice floor prices?

Rice production in Colombia is divided into two groups: on the one hand, there is rice that has the necessary infrastructure for irrigation, drying, and storage, which is planted in about 30% of rice lands.

On the other hand, there is dry rice, present in about 70% of the country’s rice lands. The Colombian Agricultural Research Corporation (Agrosavia) explains that dry rice production does not require a large infrastructure, since this variety requires only rainwater and drainage channels.

Given the lack of infrastructure that characterizes 70% of rice land and the fact that it is a short-cycle crop, rice production is seasonal. Thus, planting is concentrated in the first half of the year, when rainfed rice is viable. In the second half of the year, the country only has crops that have access to irrigation, since rainwater is not sufficient to meet the crop’s requirements.

For this reason, the National Rice Growers Federation (Fedearroz) explains that the harvest from July to October is much larger, and it is required to dry and store the grain to prevent it from being damaged and the high volumes from pushing down prices, due to oversupply, during the second half of the year.

At the same time, the country’s supply of national rice in the first half of the year depends on the proper drying and storage of the grain in the large harvest, since the plantings in the second half of the year, which occur in 30% of the rice-growing areas (which are irrigated and produce rice during the second half), are insufficient to supply the national demand.

To this end, the country has had a storage incentive for nearly 30 years, which involves setting a floor price for producers, so that they never receive less than this amount when selling their rice to the industries that participate in the program.

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