April 4, 2006

Farmers may reduce wheat acreage in Brazil

Farmers at the agricultural state of Rio Grande do Sul are dismayed by low wheat prices, at an average BRL$18 (US$8.4) per sack, 25 percent less than the minimum price of BRL$24 (US$11.2) set by the government.

Many farmers plan to suspend or to reduce their planting of wheat, substituting it for some other crops.

Wheat acreage could drop up to 10 percent, to 1.97 million hectares, according to estimates by Safras & Mercado analyst Elcio Bento, adding that the area will depend on the price of wheat by the beginning of the planting season.

He noted that the farmers are demoralised after two successive crops with low returns sapped most of their capital.

Brazil produced 4.873 million tonnes of wheat in the 2005/06 crop year.

Wheat planted in the agricultural state of Parana may fall by almost 20 percent, to 1 million hectares, according to the Department of Rural Economy. Prices of wheat in the state are now 7 percent less than one year ago.