June 22, 2004

Brazil, China Close Deal To End Soy Impasse

Chinese officials agreed to lift a ban on Brazilian soybean exports from 23 companies Monday, signaling a return in the billion-dollar trade, said a spokesman for Rio Grande do Sul state
government, who is accompanying negotiations.
 
Since May, China has been refusing entry o f a number of Brazilian soybean shipments because they were contaminated with fungicide-tainted seeds and has been banning imports from the responsible companies.
 
An agreement was reached at a four-and-a-half-hour meeting between a Brazilian agricultural delegation and officials from China's Quarantine Ministry in Beijing, according to Rui Feltin, spokesman for Rio Grande do Sul state Gov. Germano Rigotto, who took part in the talks.
 
The Chinese Quarantine Ministry is now drawing up the document to be signed.
 
Crucially, the Chinese agreed to accept cargos with up to one fungicide-tainted seed per kilogram, the tough threshold laid down in new regulations issued by the Brazilian government this month, said Feltin. Previously, the Chinese had said it would turn back Brazilian shipments containing any level of fungicide, effectively freezing trade.
 
The Agriculture Ministry was awaiting official confirmation that China would lift the ban but was confident it would be issued soon, said a Ministry spokesman.
 
The ban extended to major trading firms such as Cargill Inc. and Archer Daniels Midland Co. and blocked about 90% of Brazil's bean exports to China.
 
The successful talks came two days after China's President Hu Jintao sent a message to Brazil's President Luiz Inacio Lula da Silva, expressing the Chinese government's desire to resolve the dispute over Brazilian soy products.
 
Brazilian soybean exporters say the ban was not motivated by health concerns, but by the fact that stocks were high in China, and prices had nosedived after Chinese crushers had bought the soybeans.
 
Brazil is the world's No.2 soybean exporter with around a third of those shipments going to China. In 2003, Brazilian exports to China totaled 6.1 million tons.