June 10, 2004

Brazil Imposes Tough Soy Contamination Limit To Woo China

Brazil's government imposed tough new rules on contamination levels in soybean shipments in an attempt to convince China to lift its ban on imports from seven companies, Agriculture Minister Roberto Rodrigues said Wednesday.

The government would not allow soybean exports to leave port should they contain more than one fungicide-tainted seed per kilogram of soybeans in the hold, he told reporters.

Tighter than the U.S. limit of three beans per kilo, the threshold has been announced after Chinese authorities barred Brazilian exports from a number of companies in May for containing fungicide-tainted seeds.

China is Brazil's main soybean client, importing 6.1 million metric tons in 2003, and the return of trade is a top priority.

In talks with government officials last month, Chinese officials indicated that they were conducting a zero-tolerance policy on fungicide contamination. But exporters said that would make exporting impractical.

"The one grain limit is practical though. The question is whether the Chinese will respond by lifting the ban," said Sergio Mendes, head of the Brazilian Cereal Exporters Association, or ANEC.

Exports to China have virtually stopped since the contamination issue was raised.

Local industry heads and traders say the ban was probably imposed to slow the flow of expensive shipments until the U.S. crop comes on line later in the year.

Under the new rules, which will possibly be published Friday, soybean cargoes will be tested should a visual check indicate a high level of colored seeds.

However, should another contamination level be stipulated in the contract to buy soybeans, that level will be observed.