April 21, 2016
Brazil waives tax to prompt more corn imports
Brazil''s second corn harvest could be hit by scarcity, and thus an import tax on one million tonnes of corn from outside the Mercosur trade bloc will be waived for now.
According to the Foreign Trade Council, the tax break- set at 8% - will last for the next six months.
A devaluing Brazilian real had led to a frenzy in the country''s corn exports in 2015, resulting in undersupply and increased local prices. 30 million tonnes were exported during February 2015 – January 2016, and the same amount could be delivered in the 2016-17 season.
The potentially uptrend could also be upset by April''s dry weather; Mato Grosso, the rest of the center-west and Parana are those affected corn-producing areas, and renders the production goal of 56-58 million tonnes of crops a rather daunting aspiration, analysts opined.
Additionally, a strained local supply may also emerge at the end of 2016 as 60% to 65% of projected Brazilian crop had been sold for export.
In May and June, Brazil could import between 500,000 and 700,000 tonnes of corn, with most originating from Argentina and Paraguay. US corn in the northeast could also be conveniently imported into the country due to the tax break.
Meanwhile, Katia Abrea, the Brazilian Agriculture Minister, advocated a more significant tax cut which could lower prices by about 10%.
The proposal was opposed by the Finance Ministry which argued the imperative for sustaining revenues during an ongoing recession.