Cocoa producers pressure Brazilian government to revise tax import incentives

Brazilian cocoa producers from the country’s north and northeast defended on Wednesday, June 29, the revision of the drawback incentives for almond imports from African countries. They participated in a public hearing organized by the Future Committee of the Senate requested by Senator Zequinha Marinho.

The drawback is a special customs regime that provides for the suspension or elimination of taxes on the purchase of inputs used in the industrialization of products intended for export. According to the producers, the entry of African cocoa purchased by the domestic industry lowers the commodity’s price in Brazil and harms local farmers.

— We are going to work to build an understanding with the Federal Revenue and the Ministry of Economy to see what is harming the producer — promised Senator Zequinha Marinho.

Francisco Bezerra is president of the Cocoa Commerce Chamber in Rondônia and director of Institutional and Governmental Relations of the National Association of Cocoa Producers (ANPC). He states that the drawback harms at least 4,850 families living on cocoa plantations in the state’s 9,000 hectares of the planted area.

— All the investment and the producer’s dreams are falling apart due to this unfair way of importing almonds from the African continent. This operation is making the activity unfeasible. There is an urgent need to stop or, in some way, intervene in this import process. We don’t have a big enough local industry to absorb our production, and we are hostages to the import pricing policy — he said.

For Vanuza Barroso, president of the ANPC, the Brazilian cocoa production crops are “in a real shipwreck.” She points out that an arroba (14.7 kilos) of the commodity, which last year cost R$ 287, is worth less than R$ 260 at the current price. The producer says that part of the problem is due to the excess supply of almonds in Brazil, caused by imports facilitated via drawback policies.

— Cocoa is a commodity. As such, values are driven by the dollar and the stock market. But we also know that excessive imports and high inventories at mills directly impact the amounts paid for cocoa. The industry, playing its capitalist role, denies this — criticized her.

The vice president of the ANPC, Eunice Gutzeit, warns of another facet of the problem: the possible introduction of new pests in loads of almonds imported from the African continent.

— See the risk we are taking. We have enough diseases here in Brazil that we need to fight. We have the witch’s broom and the brown rot, among others. We cannot allow other diseases to reach our territory. We are talking about a culture that helps preserve our forests, especially in the Amazon and Atlantic Forest regions.

Economist Antonio Mascarenhas de Souza Sobrinho recalls that, until the 1980s, Brazil was the largest cocoa exporter in the world, with an annual production of 448,000 tonnes. With the introduction of the witches’ broom, a pest that affected almond production, Brazil’s share in the international market dropped from 6% to 0.2% and decimated local producers.

Sobrinho assesses that the drawback policy puts the sector at risk again. The economist criticizes “the large amount” of imports carried out by the milling industry, which, according to him, lowers prices and strangles the local producer.

— In order to supply the installed capacity of 275,000 tons per year, the national milling park started importing a large amounts of almonds, reaching a significant excess of almost an entire crop. Then, the industry obtained a concession to operate with the benefits of the drawback. The burning question is: Is the industry concerned with supplying its milling park or expanding its profits at the expense of producers already suffering? — questioned him.

Industry voices

The public hearing was attended by Anna Paula Losi, executive director of the National Association of Cocoa Processing Industries (AIPC). She said that the price paid to national producers in Brazilian currency is much more influenced by the dollar variation than by cocoa imports. In addition, the executive denied the existence of a “very high stock” of almonds, referred to by other debaters.

— I don’t know where this so-called “stock” is. It’s certainly not in the industry. Without imports, we would have a deficit of almost 200 thousand tonnes. On March 31, 2020, we had 5 thousand tonnes in stock. That wasn’t even enough for 15 days of milling  — stated her.

Anna Paula Losi recalled that Brazil occupies the sixth position (3.9%) among the world’s largest cocoa producers, behind Ivory Coast (43%), Ghana (20%), Ecuador (6.9%), Cameroon (5.5%), and Nigeria (5.5%). According to the executive, national producers alone cannot meet the demand of the four processing plants installed in the country.

— Imports occur based on our external customer demand. Brazil is an export hub for value-added cocoa products. We export derivatives. If we do not have enough almonds to process and export, we will lose an important consumer market, which other countries will quickly serve. If we were to rely only on Brazilian cocoa, we would close one factory, two factories perhaps, and try to salvage production with what we produce nationally. Thus, prices would fall because having cocoa and insufficient installed capacity lead to price drops —  pondered her.

The Regional Coordinator for Research and Innovation of the Executive Committee of the Cocoa Crop Plan (Ceplac), José Marques Pereira, defended finding a “balance in the cocoa production chain.”

— It is clear that the industry depends on cocoa to function, and the sector must remain in place. However, to produce, someone must highly compensate the supplier. We support the entire production chain and, thus, the whole import system should be improved —  commented him.

Source: Agência Senado

To read the full original article, please go to: https://www12.senado.leg.br/noticias/materias/2022/06/29/produtores-querem-revisao-de-incentivos-tributarios-para-importacao-do-cacau

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