Productivity, demand, and spending on leases in rice farming in Rio Grande do Sul

The objective of this article is to reconcile seemingly contradictory facts regarding rice farming in Rio Grande do Sul: while domestic rice prices have declined significantly in recent decades, expenses related to land leases in irrigated rice-producing regions of Rio Grande do Sul have grown substantially. To elucidate this dichotomy, data from the 2006 and 2017 Agricultural Censuses and the 2006-2018 Municipal Agricultural Survey, both produced by the Brazilian Institute of Geography and Statistics (IBGE), were used to evaluate the hypothesis that the heterogeneous growth in productivity in irrigated rice cultivation in the producing regions of Rio Grande do Sul has caused a concentration of demand for land leases in areas with the greatest increase in productivity. To this end, an econometric analysis was carried out, in which the variation in lease expenditures was used as an endogenous variable, and variations in rice, corn, and soybean productivity as explanatory variables. Control variables were also used to isolate the influence of the variables of interest. A significant impact of increased rice productivity on increased lease expenditures in rice-growing regions of Rio Grande do Sul was detected; however, such impacts were not significant on the growth of soybean or corn productivity.