June 17, 2009

Facing tight regional wheat supply and the prospect rising local costs for wheat products, Brazil's s government may consider reductions in external tariffs on imported wheat from the US and Canada, the Estado news agency reported Tuesday (June 16).

According to the report, Brazil's wheat millers association, Abitrigo, will lobby in favour of a temporary suspension of the tariff at a meeting of the government's executive foreign trade committee, Camex, on Thursday. The common external tariff, or TEC, on wheat from outside the Mercosur trade bloc currently stands at 10 percent.

Abitrigo calculates that Brazil will produce 6 million tonnes of wheat this year, against a local demand for product of 10.5 million tonnes.

Brazil has faced tight supplies and rising costs of wheat products recently due to disappointing wheat production this year in neighbouring Argentina.

Despite Abitrigo's lobbying in favour of a tariff reduction, Agriculture Minister Reinhold Stephanes has indicated he is against the move.

"What's most probable is that there won't be imports with TEC exemptions this year," he said, adding he estimates Brazil currently has sufficient wheat stocks for an additional 120 days.

Stephanes is from Brazil's southern state of Parana, the country's largest wheat producer.

Government authorities, meanwhile, said that in considering the tariff reduction they would take into account average incomes of local wheat producers and projected price increases for wheat products such as bread.