January 20, 2014

Bunge to close soy processing plant in southern Brazil

Bunge Brasil, subsidiary of US-based Bunge Ltd, is closing a soy processing plant in southern Brazil's Rio Grande do Sul state, citing Brazil's tax structure which favors the export of raw soybeans, according to a Reuters report.

Despite the closure, Bunge still has six soy processing plants in five states in Brazil, The company said closing the plant will not affect other operations in Passo Fundo, Rio Grande do Sul, where it has a grain silo, and some commercial activity.

"Some factors have impacted soybean crushing activities in this country, favoring the sale of grains at the expense of processing products such as oil and meal," Bunge said in a statement last Thursday.

Soy crushing plants in Brazil had processed less in 2013 than in 2012, after president Dilma Rousseff's government lifted the so-called PIS/Cofins social-security and payroll tax from the cooking-oil industry. Soy crushers are thus left with large amounts of worthless tax credits, which could previously be used against other tax liabilities, but many of those taxes were also lifted.

The changes have hurt the crushing industry's profit margins and have left processing plants idle.