Cascavel – The Brazilian minister of Agriculture, Reinhold Stephanes, believes that the Brazilian wheat production should grow by 10% this year, and may cater to as much as 60% of domestic demand. Last Friday (3rd), during the official launch of the wheat crop in the state of Paraná, the leading national producer of the grain, he called attention to the stimulus provided by the federal government to the cultivation of the product’s highest quality variety.
"The minimum price has already been set, and we have even introduced an innovative feature, which consists of setting a higher price for the higher quality wheat. In other words, we are inducing farmers to produce better wheat," he stated. The National Monetary Council (CMN) decided, on March 26th, to readjust in different ways the price of improver wheat, which is considered to be of better quality and is used for bread manufacturing, and the soft variety.
The minimum prices for the two types, which used to be of 480 reals (US$ 214) per tonne, have increased, respectively, by 15.63% and 10.42%, rising to 530 reals (US$ 237) and 555 reals (US$ 248) per tonne. In the last crop, the country produced six tonnes of wheat, as against a domestic consumption of 10.86 million tonnes. The state of Paraná answers to 53% of national production.
According to the secretary of Agriculture of the state, Valter Bianchinni, the state government, in partnership with the Bank of Brazil, ensures that there will be no shortage of funds to wheat farmers, and that a 5% growth in planted area is expected.
"If the weather helps, then Paraná is going to have as good a crop as last year’s, which yielded 3.2 million tonnes, or even a bit more, at 3.5 million tonnes, due to the larger planted area," Bianchinni told Agência Brasil. He informed that, given the fact that improver wheat cultivation predominates in Paraná, the different readjustment rates of minimum prices benefits farmers from the state.
In 2007, the wheat crop yielded 4.1 million tonnes. Despite the low figure, the crop had already posted significant growth compared with the previous year, when crop yield was 2.3 million tonnes. The need for Brazil to produce more wheat has increased, especially after Argentina, the main supplier of the product, had a drastic reduction in its production. Thus, the Argentinean government adopted measures to reduce exports and ensure domestic supply.
Even though the Brazilian production increased, the country will probably need to import over 4 million tonnes this year, a volume that is not going to be fully made supplied by Argentina, which should export a total of 3.4 million tonnes, of which approximately 2 million should go to Brazil. Thus, wheat mills are already calling on the government to reduce the Common Foreign Tariff (TEC), which is of 10% for countries outside of the Mercosur.
According to Stephanes, this should be done at the right moment and in the right quantity, so that imported wheat does not lead to a reduction in the price paid to Brazilian wheat farmers. To that extent, the TEC should be reduced only when inventories are nearing depletion, and in a volume that will keep the market supplied until shortly after the next harvest. "I refuse to discuss the reduction of this tariff with the Brazilian Ministry of Development, Industry and Foreign Trade," said the minister in his speech.
*Translated by Gabriel Pomerancblum