Santa Catarina extends dairy protection policy, cutting milk imports by 75%

The government of Santa Catarina has extended the suspension of tax incentives for the import of milk and dairy products for another 12 months. The decree, signed by Governor Jorginho Mello on Wednesday (30), extends until July 2026 the full collection of ICMS (a state VAT) on these products, with rates ranging from 7% to 17%, depending on the item.

The decision is part of the “Leite Bom” (Good Milk) Program. It aims to protect Santa Catarina’s dairy industry from international competition, particularly from countries such as Argentina and Uruguay, where milk production is heavily subsidized. Before the suspension of tax benefits, the average tax burden on imports was just 1.4%, favoring the entry of imported milk at prices lower than those of local producers.

“We know how difficult it is for those in the field to compete with subsidized products from abroad. This measure is to ensure a fair market for our producers,” said Governor Jorginho Mello.

Since the measure came into effect, the results have been significant. According to the State Finance Department (SEF/SC), the volume of milk and dairy imports dropped nearly 75% in the first half of 2025 compared to the same period the previous year, falling from R$512.5 million to R$135.2 million. At the same time, local production grew 26%, rising from R$5.4 billion to R$6.8 billion.

Finance Secretary Cleverson Siewert emphasized that the figures prove the effectiveness of the measure. “We reduced the influx of imported milk and strengthened Santa Catarina’s production. It was a concrete response to a sector that had been suffering from unfair competition,” he stated.

Incentives for the dairy agribusiness

In addition to suspending incentives for imports, the state has expanded support for the local agroindustry. Under a project approved by the state legislature, more than 100 companies in the sector began receiving tax benefits similar to those offered in neighboring states such as Paraná and Rio Grande do Sul.

Presumed tax credits for products such as UHT milk, cheeses, and derivatives are expected to generate a phased impact of R$150 million over three years: R$75 million in the first year, R$50 million in the second, and R$25 million in the third. These companies currently employ around 7,300 people.

Santa Catarina is the fourth-largest milk producer in Brazil, with about 80,000 farmers and an annual output of 3.2 billion liters. The dairy industry is the third-largest segment within the state’s agribusiness sector.

For Agriculture and Livestock Secretary Carlos Chiodini, the “Leite Bom SC” Program represents a strategic advancement. “We are creating the conditions for producers to invest, increase their income, and remain on the land, while strengthening industry and the regional economy,” he said.

Credit lines for producers

Additionally, under the “Leite Bom” Program, the state government allocated R$150 million in financing through the Pronampe Leite SC and Financia Leite SC programs, which the State Rural Development Fund manages. The funds are intended to support both operating and investment needs in the production sector, offering lines of credit that range from subsidized interest rates to interest-free loans.

The goal is to ensure competitiveness and sustainability for Santa Catarina’s dairy cattle farming sector amid an increasingly challenging national and international environment for small and medium-sized producers.

Source: Clic RD

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