Why wheat is at risk in Brazil – and what this means for our daily bread

The beauty of the wheat fields contrasts with the producers' worried expression. Due to the heavy rains in Rio Grande do Sul in recent weeks and the cold snap that followed, the most optimistic harvest estimates are unlikely to come true. And, as if the frustrations related to the weather were not enough, other threats cast doubt on the future of the grain in the country.

High costs, low producer prices, growing debts and weak public policies are among the barriers that threaten the viability of the crop. A crisis in wheat cultivation tends to be reflected, sooner or later, in the prices of bread, pasta, cakes, cookies and other essential products that have the cereal as a base — a direct risk to the Brazilian consumer's table.

Floods affect the South and frustrate harvest expectations

The most recent projection from the National Supply Company (Conab) is for a harvest of 8.2 million tons in 2025, 4.6% higher than last year. The increase is mainly due to higher productivity (3.1 thousand kilos per hectare, almost 20% higher than 2024), since the planted area decreased by around 13% this harvest.

In Rio Grande do Sul, the country's largest producer, the floods caused loss of soil, nutrients and organic matter. "Before the rain, I planted 25 hectares. At least 17 hectares will need to be replanted. That's the area that the river hit; in the wetter areas the seeds rotted," says farmer Jônatas Seider, who planted in Tapera and Victor Graeff, 70 km from Passo Fundo.

This year's high losses are in addition to those of last year, when the people of Rio Grande do Sul faced the worst flooding in history. "Proagro compensated part of it and I had to sell the soybeans I had to pay the bill," explains Seider.

Debts pile up and threaten the continuity of wheat production

According to him, the debts are accumulating over the years and becoming a snowball. “The funding for the 2023/24 soybean harvest was extended by four years by the government, but it does not solve the problem because the funding for the 2024/25 harvest was compromised by the drought. I will not be able to pay,” he says.

In addition to the losses caused by the adverse weather conditions that have been affecting Rio Grande do Sul for the second year in a row, production costs are extremely high, according to Seider. “My cost is already 50 bags per hectare. But in the last harvest I harvested 17 bags per hectare,” laments the farmer.

In Paraná, productivity still holds up, but planted area decreases

In Paraná, the second largest producer of the cereal, climate problems had not caused significant losses until the end of last week, despite the frost in June and the heavy rains recorded in the state in the last two months.

“So far, wheat crops in Paraná are in 99% good condition and 1% average, according to data from the Department of Rural Economy (Deral) of the Paraná Agriculture Secretariat,” said Salatiel Turra, economist at Sistema Ocepar, in an interview with Gazeta do Povo last week.

The new cold snap in recent days, however, has rekindled concerns about possible damage to crops. The next surveys will determine the effects of recent weather events on production.

The uncertainties had already caused a 27% reduction in the area planted in the 2024/25 harvest in Paraná compared to the previous harvest. “This reduction is mainly due to the replacement of wheat by crops considered more profitable, such as second-crop corn, in addition to price volatility,” argues Turra.

These aspects are corroborated by Ralf Dengler, executive manager of the Meridional Foundation, an entity that brings together producers of winter wheat and cereals from the South, Southeast and Central-West. According to him, seed sales in the current harvest were, on average, 50% lower than in the last harvest.

“Winter crops will always be subject to greater risk when considering weather conditions. In recent years, low prices and high costs have been the main culprits in this story, as any adverse environmental conditions that reduce production potential represent a huge financial loss,” Dengler points out.

Rural insurance shrinks and wheat producers become more vulnerable

To make the situation even more precarious, the federal government announced the blocking of R$445 million from the budget allocated to the Rural Insurance Premium Subsidy Program (PSR) for 2025.

According to economist Antônio Luz, from the Agriculture Federation of the State of Rio Grande do Sul (Farsul), since 2023 the rural insurance budget has been falling and the government is not fully executing the reduced budgeted amounts.

“In 2024, a little over R$1 billion was budgeted, but they executed a little over R$600 million, that is, last year there was no rural insurance. R$600 million for the production cost that we have today, for the whole of Brazil, does nothing. This year the government budgeted again above R$1 billion, but it executed 6% and we are already at the end of the first semester. Now it is contingency this entire amount, but it was not already executing, that is, it is a fooling me that I like,” he says.

Wheat imports rise and minimum price policy is criticized

The government has already announced that it will import 6.5 million tons of wheat, arguing that the country is not self-sufficient in its production of the cereal. Last year, the country imported more than 6.6 million tons from abroad, the highest volume since 2019. From January to May this year, 3.1 million tons were imported, the highest amount for the period in the last 18 years.

To alleviate the problems and ease complaints, the government says it has already adopted a Minimum Price Guarantee Policy (PGPM). However, farmers and agribusiness entities believe that it does not encourage national production.

“There is no point in guaranteeing the minimum price only for pH 78 (wheat pH is an indicator of grain quality and 78 is a good number). We need to guarantee a minimum price regardless of quality. There are years when we can harvest quality wheat when the weather is favorable, but there are others when this is not possible,” says Seider.

Turra believes that the PGPM is valid in the short and medium term as a way to help contain food inflation, but it is necessary to go further: “In the current situation, without an effective government policy to support the wheat production sector, inflation of foods derived from the cereal tends to remain the same or even worsen”.

Without insurance and without income, producers ask for debt renegotiation

Facing climate problems, discouraged from producing, without rural insurance and in debt, producers and experts advocate renegotiation mechanisms so that national production does not fall even further.

“When there is no insurance, there is renegotiation, extension, securitization. Agriculture is an open-air industry, and climate problems affect the production process. So, when there is no insurance, debts need to be renegotiated,” argues Luz.

“The only way to pay my debts is to go through securitization because we can dilute the debts over a longer period of time with more affordable interest rates,” says Seider.

Irrigated Cerrado is a bet for the future, but still accounts for only 5%

Securitization is being debated in the Federal Senate, in Bill 320/2025, which provides for "securitization of debts of rural producers whose businesses have been impacted by adverse climate events from 2021 onwards”. The Chamber, in parallel, is debating Bill 341/2025, similar to that of the Senate. There is no deadline for voting on the proposals.

As for the future of wheat in Brazil, Dengler believes that it may lie in the central region of the country, which is experiencing rapid growth but currently produces only 125,000 tons, equivalent to 5% of national production. “Perhaps the irrigated Cerrado could be an option. However, with the limited available area, everything leads us to believe that we will continue to be major importers of this cereal,” he concludes.