We will not let agro pay the tax reform bill, says new leader of the ruralist group

The president of the ruralist group, deputy Pedro Lupion (PP-PR) said that the beginning of the government of Luiz Inácio Lula da Silva (PT) gave bad signs for agribusiness and that the sector will not pay the bill for a possible tax increase after tax reform.

“I think that the government’s demonstrations in that first month were not at all positive for agro. This worries us. This issue [do esvaziamento] of the ministry [da Agricultura] it got really bad,” he said in an interview with Sheet.

Lupion also criticized Lula’s stance in criticizing the president of the Central Bank, Roberto Campos Neto, although he considers that low interest rates are positive. “That [tom de Lula] generates a completely unnecessary tension in the market, the Brazil risk increases. It increases cost.”

He views with concern one of Lula’s main priorities in the economic area, the simplification of the Brazilian tax system. Among the fears, the future of the Kandir Law —which exempts exported products from the state ICMS.

“I think this bill cannot be paid by the agro and we are not going to let that happen”, he said.

How many deputies and senators does the FPA [Frente Parlamentar da Agropecuária] currently meet? I have to see the most recent number, but I believe we’re closer to 300. That’s an increase from the previous legislature, particularly in the Senate. We have already started to feel a much greater involvement of senators with our bench. So I think we will be able to unlock the guidelines. In the last four years we managed to advance our agenda a lot in the Chamber, but in the Senate we found a very complicated barrier.

What projects? Environmental licensing projects, land regularization and the new pesticide law are stalled in the Senate.

The agricultural defensive project became known as “PL do Veneno” before some alterations in the Chamber. Ruralist government allies defend the most recent version of the proposal, but the environmental wing resists. Does this really have a chance of moving forward? It’s a matter of narrative. The objective is nothing more than to modernize the agricultural defensive licensing sector. It’s not going backwards. It is to modernize. We need to have modern products, modern molecules that make us have fewer applications with products that leave less waste and that we can achieve greater efficiency. I’ve seen products in the US that are ten years ahead of us. There are products that we are trying to license here in Brazil that they no longer use and are obsolete.

What is the bench’s assessment of the changes made in this government? The Ministry of Agriculture has a very good track record even in PT governments, which we are ideologically opposed to. the minister [Carlos] Fávaro is extremely well intentioned. What concerns us today is how this reorganization of ministries turned out. The Ministry of Agriculture was unfortunately very weakened. This Conab story makes no sense [a estatal Companhia Nacional de Abastecimento] in the MDA [Ministério do Desenvolvimento Agrário]. There is no negotiation of any kind in this regard. we need this [voltar a Conab para a Agricultura] happen.

Are there other points? We are very concerned about the issue of family farming. In the last Crop Plan, 70% of the hires were for family farming. It’s not that subsistence family farming. Large family farming in Brazil is a business, it is part of the market. The objective of the MDA is not agriculture as a business. The objective of the MDA is the social question of agriculture. Family farming is not a social policy, today it is a business, it is a commercial relationship.

Agribusiness mostly supported Bolsonaro and there were fears about what the Lula government would look like. How is the sector seeing these first 30 days? I think that the government’s demonstrations in that first month were not at all positive for agro. This concerns us. This issue of the ministry got very bad. the minister’s speech [do Desenvolvimento Agrário, Paulo Teixeira, de que títulos dados por Bolsonaro a assentados são papel de pão e não têm valor jurídico] it was really bad. It’s a horrible signal for us. The MST itself [Movimento dos Trabalhadores Rurais Sem Terra] has been making extremely negative signals.

There are positive signals from the Ministry of Agriculture, there are negative signals from the MDA. It is obvious that the great Brazilian agro, the vast majority of Brazilian rural producers did not support the government, but, as Minister Fávaro says, the election is over. People need to survive. This will depend on the government not harming us, not attacking us, not putting an end to public policies aimed at agriculture.

The first term of the Lula government was driven by the commodity cycle. What is the scenario now? I think that Brazilian agricultural commodities will continue to be the driving force of the country, they will continue to be the vast majority of our trade balance. We have legislation today that facilitates their export. We have a very serious concern with tax reform. The Kandir law is essential for the Brazilian agro. This export tax exemption makes us as competitive as we are today with our major competitors —namely the United States and Europe— and we need to continue with that.

Which tax reform project passes, in your opinion? Within this tax reform, we are going to deal with VAT [Imposto sobre Valor Agregado, a ser criado a partir da fusão de outros tributos]. Let’s deal with the single tax, someone will have to pay this bill. This compensation will come out of tribute from somewhere. The State will not lose; as always in Brazil, right? So we need to understand who will pay this bill. I don’t think it can be paid for by agro and we’re not going to let that happen. Today we have advantages of international competition precisely because of current legislation. People pay and pay a lot of tax. What we have today, an advantage, is the issue of ICMS on exports, which is a matter of the Kandir law that we need to maintain. It is obvious that if there is any kind of loss, an increase in taxes on Brazilian agribusiness, we will react head-on and we have numbers for that.

What is your view on the actions of President Lula and some ministers against interest rates and against the BC president? The National Congress approved the BC’s autonomy precisely so that this does not happen. I am very sorry, because this generates tension in the market that is completely unnecessary, the risk in Brazil increases. This increases cost. So for us this is very worrying. Now, it is obvious that controlling interest is positive. You have low interest is positive. But you have to think about inflation. I’d rather have interest a little higher and not have inflation than the other way around.

And the interest in the sector? Last year, the calculation of the Safra Plan was extremely difficult because we were coming out of a pandemic, it was immensely difficult. We have the task of trying to keep the interest rate below two digits for the Safra plan, which is the subsidized interest rate. And that comes at a huge cost.

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Pedro Lupion (PP-PR), 39 years old

Graduated in Advertising, the man from Paraná is also a businessman and political scientist. Lupion is in his second term as a federal deputy. Before, he had two terms as state deputy in Paraná. He took command of the ruralist bench in February 2023.