May 5, 2006

Brazilian official hints soy may not be in minimum price programme

Brazil's Agricultural Policy director Ivan Wedekin hinted Thursday (May 4) that the government would not include soy in its minimum price guarantee programme.

Farmers are blocking main shipping routes out of Mato Grosso and Mato Grosso do Sul, as well as closing some grain silos. Farmers in the centre-western state of Goias are expected to join the movement this week.

The farmers are demanding that the Brazilian government devise a package that saves them from being forced to sell soy below production costs, farm groups have said.

Wedekin said the government was discussing other measures, such as tax breaks, that could help the liquidity crisis facing Brazilian soy farmers.

"Soy's problem is largely a foreign exchange problem, and any farm package we could offer would be too small to support the volume of soy in Brazil," Wedekin told an audience of agribusiness representatives and investors in Sao Paulo Thursday.

Soy is Brazil's biggest farm commodity in both volume and acreage.

Corn comes in a distant second and receives price guarantees and is part of the government's buying programme.

The Brazilian government is expected to announce a farm aid package later this month.