Guedes wants to reduce maritime freight rates to avoid fertilizer shortages in Brazil

The Minister of Economy, Paulo Guedes, presented to President Jair Bolsonaro a proposal to decrease the value charged as the Additional Freight Rate for the Merchant Marine Renewal (AFRMM) and thus decrease the costs faced by shipping companies in Brazil. The minister’s goal with the tax cut is to avoid fertilizer shortages in Brazil amid Russia’s conflict with Ukraine.

Guedes recommends reducing AFRMM charges in long-haul navigation from 25% to 16.5%; in coastal shipping from 10% to 6.6%; and river and lake navigation (when transporting liquid bulk in the North and Northeast regions) from 40% to 26.5%.

In the draft submitted to President Bolsonaro, the minister claims that the Covid-19 pandemic has inflated the costs of handling containers and ponders that “because the AFRMM is linked to remuneration rates in waterway transportation, any increase in the cost of sea freight affects the tax’s rate, which, in turn, has a direct effect on the operation costs of importing companies or those that used imported inputs.”

“The AFRMM contributes to the cost of transport freight, especially in regards to primary sector products, among which are included important items that make up the national staple basket or interfere with its costs, such as grains, flour, wheat, salt, and fertilizers,” comments Guedes.

Brazil imported nearly 80% of the fertilizers it consumed in recent years. More specifically, 83% of the nitrogen-based fertilizers used in the country were imported, while 61% and 95% corresponded to imported phosphorus and potash, respectively. Guedes estimates that the country imports 26 million tonnes of fertilizers each year.

The minister presented the proposal to Bolsonaro on Monday (7). On March 29, the government will introduce a national plan to deal with fertilizer shortages in Brazil. If the president accepts Guedes’ suggestions, the decree can be signed at the plan’s launch ceremony.

Source: R7

To read the full original article, please see:

https://noticias.r7.com/brasilia/guedes-quer-reduzir-taxa-de-frete-maritimo-para-evitar-desabastecimento-de-fertilizantes-08032022

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