São Paulo – The Brazilian Ministry of Development, Industry and Foreign Trade announced that the Import Tax on bulk maize was slashed from 8% to zero. Authorized by Brazil’s Foreign Trade Chamber (Camex), the move was published this Friday (22nd), will remain in effect for six months, and applies to a maximum quota of 1 million tons.
According to the ministry, the temporary tax exemption was approved at the request of the Ministry of Agriculture, Livestock and Supply and is intended to “rebalance the domestic market, preventing meat production costs from rising significantly.” Maize is largely used as poultry and pork feed.
According to a statement issued by the ministry on the 19th, its Agricultural Policy secretary André Nassar said the call for a tax break on maize came from poultry, pork and dairy producers, who complained about high costs. “Imports of the grain, which serves as the basis for animal feed, will impact positively on domestic maize prices,” the secretary said then.
He added that since the exemption will be valid from May to October, national maize producers will not be affected, since the next crop will be sold after that period.
On submitting the plea to Camex, the Ministry of Agriculture argued that “This year began with high domestic prices, buoyed by strong exports in the final quarter of 2015. Moreover, the relevant increase in exports since October of last year has caused final inventory estimates to drop to a current 10 million tons.” The ministry believes maize exports will continue to go up.
The Ministry of Development added that maize has been added to the List of Exceptions of the Mercosur’s Common External Tariff (LECET). Maize, registered under number 1005.90.10 in the Mercosur Common Nomenclature (MCN), replaced the item “simply threshed cotton” (NCM 5201.00.20). The LECET can include as many as 100 items.
Brazil imported USD 19 million worth of maize from January through March this year, up 38% from Q1 2015. Imports amounted to 138,000 tons, a 30.5% increase. The supplying countries were Argentina and Paraguay, with a small amount coming in from the United States. The numbers are from the Development Ministry’s Secretariat for Foreign Trade (Secex).
Conversely, maize exports from Brazil grossed USD 2 billion from January to March, twice as much as in Q1 2015. Approximately 12 million tons were sold abroad, two-and-a-half times as much as in Q1 2015.
On the other hand, imports of “simply threshed cotton” added up to a measly USD 990,000 in Q1 2016, up 65.5% from Q1 2015. The product came from the United States and Egypt.
Petrochemicals
Besides maize, Camex extended the import tax exemption on “p-xylene” (NCM 2902.43.00) to November 19, with the maximum quota set at 90,000 tons. The regular tax is 12%.
P-xylene is used in the manufacturing of PET resin. Brazil imported USD 32.7 million worth of it in Q1, a 7.2% increase over a year ago. Imports reached 44,500 tons, a 48% increase, and the product came from the United States.
*Translated by Gabriel Pomerancblum
