Brazil’s meat industry warns of rising prices and calls for government tax breaks

RIO DE JANEIRO, BRAZIL – The industry is calling for new tax exemptions and for the introduction of measures enabling the import of supplies at lower costs.

The pork and chicken industries on Monday, May 24, released a manifesto stating that new price hikes for these products are expected to impact Brazilian consumers. The increase is ascribed to the pass-through of costs incurred with raw materials such as soybeans and corn.

The Brazilian Association of Animal Protein (ABPA) said in a statement that corn and soybeans, basic supplies that make up 70% of production costs, have increased by over 100% and 60% respectively over the same period last year, squeezing margins and resulting in financial hardship for companies.

In the case of corn, there is an aggravating factor, with the crop reduction caused by drought in Brazil pushing up prices.

In a note, ABPA also stressed the urgency of new tax exemptions and the implementation of technical measures to enable the import of supplies at lower costs.

To prevent the situation from aggravating further, industry representatives called on the government to take measures so that Brazil’s animal protein sector “has equal competition for supplies in relation to the international market, thereby averting de-industrialization and the loss of jobs.”

The note states that poultry and swine breeding, in addition to accounting for 4 million direct and indirect jobs, also ensure the “food security of our population.”

In April, the sector had its request for the Common External Tariff for corn, soybean and byproducts, such as soybean meal, imported from outside MERCOSUR to be eliminated. But this has been insufficient to enable foreign purchases at lower costs, which led the segment to formalize new requests.

ABPA commented that “there is tariff exemption for this import, but there is no technical feasibility,” in reference to transgenic products approved in other countries that are not authorized in Brazil, which limits business. In this case, the sector calls for urgent authorization to import corn and soybeans used strictly in animal feed.

The association also wants the suspension of the Additional Freight Tax for the Renovation of the Merchant Marine (AFRMM) on the importation by ocean-going vessels of supplies from non-MERCOSUR countries.

Furthermore, it submitted a request for the temporary suspension of the PIS and Cofins (federal taxes based on the turnover of companies) collection on imports from non-MERCOSUR countries, for companies unable to make a “drawback.”

The segment also wants the temporary suspension of PIS and Cofins levies on freight charges in the domestic market.

And it stressed the need to create an official system to anticipate information about future grain exports, as occurs in other countries, “to give more transparency to the supply market, thus averting speculative situations such as the current one.”

Source: G1