By Newsfeed

RIO DE JANEIRO, BRAZIL – Brazil has agreed to import up to 750,000 metric tons of US wheat annually, without the usual duties it pays for wheat grown outside the Mercosur countries. This move has disappointed Argentina, writes Gill Hyslop from William Reed Business Media.

"Under Mercosur regulations, Bazil must request permission from Argentina, as the main supplier of wheat to the neighboring country, to carry out that operation."
“Under Mercosur regulations, Bazil must request permission from Argentina, as the main supplier of wheat to the neighboring country, to carry out that operation.”

The announcement follows the first bilateral meeting between US president Donald Trump and recently elected Brazilian Jair Bolsonaro aimed at lowering barriers to agricultural trade.

According to a joint statement, no duties will be levied on up to 750,000 tonnes of imported wheat (about 28 million bushels) a year, worth around US$ 125 million at current prices on the futures market.

The US has a vast wheat stockpile – forecast to equal a six-month supply when the 2019 crop is ready for harvest – and exports are an essential outlet.

Brazil is the world’s fourth-largest wheat importer – importing 55 percent of its annual consumption – and currently pays a 10 percent duty on wheat grown outside the Mercosur countries of Argentina, Paraguay, or Uruguay.

However, wheat growers in Argentina have expressed concern the deal could become permanent, and not just a one-off. Brazil is the primary buyer of Argentine wheat exports.

“Argentina’s wheat sector rejects Brazil’s decision to import from the United States without tariffs,” said Andres Alcaraz, spokesman for Argentina’s CEC grains export companies chamber.

“Under Mercosur regulations, Bazil must request permission from Argentina, as the main supplier of wheat to the neighboring country, to carry out that operation.”

Brazil is Primary Buyer of Argentine Wheat Exports

On the other hand, Abitrigo’s president Ruben Barbosa says the association supports the US import quota, as it will give the industry access to more suppliers at lower prices.

The Brazilian government is also hoping to see the reopening of the US market to Brazil imports.

During the news conference to announce the agreement, President Trump said he expects a “fantastic working relationship” with Jair Bolsonaro.

“We have many similar views. And we certainly feel very true to each other on trade,” said Trump.

“I think Brazil’s relationship with the United States, because of our friendship, is probably better than it’s ever been by far.”

(Article published by Gill Hyslop, William Reed Business Media)

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