Bolsonaro grants 750,000 ton wheat quota to the US

Brazil decided to follow through on a 24-year-old promise as Bolsonaro offered a 750,000 ton tariff-free wheat quota to the US this week. In 1994 Brazil agreed to set up the wheat quota to non-Mercosur countries but never followed through. The following Thomson Reuters tweet refers to some of the latest development between the two countries:

The United States and Brazil have agreed to take steps to cut agricultural trade barriers focused on wheat, pork, and beef. Brazil will allow 750,000 tonnes of U.S. #wheat tariff-free.https://t.co/4afDnBt8D2

— Karen Braun (@kannbwx) March 19, 2019

Brazil consumes about 10m tons of wheat per annum while produces only 5-6m tons. DatamarNews reported Brazil imports most of its wheat tariff-free from Argentina as well as some from Uruguay and Paraguay through the Mercosur trade agreement. Imports from the rest of the world pay 10% in duties. Once in a while, when Brazil sporadically lifts wheat tariff to non-Mercosur countries to meet import demands, the US usually ends up supplying 80% of Brazil’s wheat imports. According to the US National Association of Wheat Growers, “this is a big win for U.S. wheat farmers, the Trump Administration, and members of Congress who have pushed for action on this issue.”

Brazil has also pledged the US authorities to approve US pork, and in return the US has promised to accelerate the USDA’s Food Safety and Inspection approval of Brazilian beef. In a press conference the two countries made the following joint statement, “in order to allow for the resumption of Brazil’s beef exports, the United States agreed to expeditiously schedule a technical visit by (FSIS) to audit Brazil’s raw beef inspection system, as soon as it is satisfied with Brazil’s food safety documentation.”

Argentina’s Secretary of Agriculture has criticized Brazil’s wheat quota decision. According to La Nación, the neighboring country will analyze Mercosur agreement to determine if steps can be taken against the decision. Argentina has just registered a record wheat harvest so there are no supply problems within the Mercosur.

The following DataLiner graph shows the country’s top wheat import origins:

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