Brazil might introduce tariff-free wheat import quota in 2020

Brazil is expected to introduce a tariff-free wheat import quota of 750,000 tons per year starting in 2020, Abitrigo president Rubens Barbosa said on Tuesday, September 3.

Brazil announced the opening of its tariff-free wheat import quota earlier this year in connection with President Jair Bolsonaro’s visit to the United States, with US wheat producers seen as potential beneficiaries, although the policy has not yet been instituted.

Despite being an agricultural powerhouse, Brazil is a net importer of wheat, as its tropical climate still presents challenges to expand wheat cultivation. It imported 3.9m tons this year through July.

Argentina is the main supplier due to its proximity and also because, as a member of the Mercosur trade bloc, it does not pay the 10% import tariff that non-bloc countries need to charge.

“We are following the issue closely at the Ministry of Economy. By the end of the year, the quota should be regulated, which will allow imports from any zero-tariff country,” Barbosa told reporters at a news conference in São Paulo.

Besides the United States, other potential beneficiaries would be Canada and possibly Russia, despite higher transportation costs from the Black Sea region to Brazil compared to those in North America.

Brazilian wheat mills recently visited Russia to learn more about this wheat.

But they are working to remove a restriction imposed by the Brazilian government on Russian wheat, which says the product must be processed in mills located near ports.

It is a precautionary measure to reduce the possibility of diseases from entering Brazilian agricultural areas.

The 750,000-ton tariff-free quota is seen as helping mills reduce supply costs.

The Brazilian government has been moving towards liberalizing trade. It pressured Mercosur to close two trade deals recently, including a historic deal with the European Union.

Over the weekend, Brazil approved a tariff-free quota of 750m liters of ethanol imports to the United States.

Source: Reuters

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