Brazil to open added tariff-free import quota for wheat

Brasilia | Reuters — The Brazilian government plans to reduce to zero the 10 per cent import tariff applied to non-Mercosur wheat for a quota of up to one million tonnes through Aug. 15, a source in the government with knowledge of the plan said Wednesday.

Brazil, regularly one of the world’s leading importers of wheat, has been forced in recent years to open tariff-free quotas for U.S. and Canadian wheat due to poor output from neighbouring Argentina, which is normally Brazil’s main source for imports of the grain.

Brazil has domestic wheat demand of nearly 11 million tonnes a year but only produces between four million and six million tonnes locally.

Mercosur member states including Brazil, Argentina, Uruguay and Paraguay share a tariff-free grain trade according to the customs agreement, but all grain imports from outside the group are charged a 10 per cent common import tariff unless the government grants an emergency waiver.

The source said a decree is likely to be published in the official Federal Gazette on Friday, from which time the quota would go into effect until Aug. 15. The source added the finance ministry requested that the Camex committee in the trade ministry responsible for lifting the tariff open the quota to help ease local food inflation.

In past years, the government has periodically through the year expanded the quota and the window for imports as needed.

Imports of wheat outside of Mercosur have been almost exclusively hard red winter wheat from the U.S. and, occasionally, Canada, to blend with the softer wheats grown in southern Brazil and Mercosur neighbours.

In 2013, Brazil brought in just over three million tonnes of tariff-free wheat under quota from North America.

Argentina, whose wheat output has been falling in recent years due to internal price controls and unfavourable weather, has been unpredictable in issuing its export licenses for wheat, which has prompted Brazilian flour mills to request the government open quotas.

— Reporting for Reuters by Luciana Otoni, writing by Reese Ewing.

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