Commodities Shuttle: Reduction in the import tax does not bring relief to producer inputs

The unilateral reduction of import tax rates by 10% made by the government will not bring major changes in the production costs of producers in this and next year.

One of the highest in recent years, these expenses are due to both high external prices for inputs and the exchange rate of the dollar.

At a favorable level for exports, the value of the US currency is an obstacle to imports, due to the low value of the real.

In addition, many of the inputs imported by agriculture are already on the Letec (List of Exceptions to the Common External Tariff). They already have reduced or zeroed rates, and there will be no changes.

Total agribusiness imports, considering food, fertilizers, agrochemicals and machinery, rose to US$ 24.8 billion from January to October this year, up 39% over the same period last year.

One of the government’s objectives in taking this measure to reduce import taxes is to hold back the escalation of inflation, which is at an accelerated pace. The cost of external products at the moment is intense and should not bring great relief.

Some products that are more sensitive in domestic production, such as milk and peaches, will not have a reduction in rates so that the production power of national farmers is preserved.

The country’s spending on imports of food and other products derived from agriculture totaled US$ 10.2 billion this year, 20% more than in 2020. The highlight is for grains, which total US$ 2.5 billion, according to data of Secex (Secretary of Foreign Trade).

Another important source of expenditure in the agribusiness import balance is fertilizers. Until October, the values ​​reached a record of 33.8 million tons, with expenditures of US$ 11.5 billion in the year.

In this item, the producer will not have much relief, since many of these inputs are already on the Letec list and have their import tax zeroed.

This segment has been one of the most complicated for the producer this year. In addition to the difficulty in purchasing fertilizers, imports from January to October were 74% higher than those for the same period in 2020, in dollars. In volume, the high was 22%.

Agrochemicals (insecticides, herbicides and fungicides) also weigh more on the producer’s pocket this year. Imports add up to a record 313,000 tonnes in the first ten months and exceed by 14% those of the same period in 2020. Expenditures reached US$ 2.8 billion.

Many of the ingredients in this sector are on the list of exceptions and will not have a rate reduction.
Lígia Dutra, director of International Relations at the CNA (Confederation of Agriculture and Livestock of Brazil), says that the measure is important. “Every country that wants to be an exporter must also be an importer. The reduction in itself is a good thing, and should be done through trade agreements.”

In Dutra’s assessment, the measure has a positive side, which is to improve internal competitiveness and generate more economic development.

At this time, however, it will have a diluted effect, due to high foreign prices and the high dollar, says the director of the CNA.

“Removing 10% of import taxes has an important meaning to reduce costs, but I don’t believe it will have a very big impact for any sector, due to the exchange rate”, she says.
According to Dutra, there will not be a flood of imports, and this will not bring major problems for any sector, due to various internal factors.

Improvement… Exports of “in natura” beef started November at a better pace than in October. In the first three working days of this month, foreign sales totaled 5,266 tonnes.

…and overcomesThis volume exceeds the average of October sales by 28%, but is still 69% lower than in September, when there were 8,906 tonnes per business day.

ValueThe international price of beef, however, continues to fall. This month, Brazil exported at US$ 4,970 per ton, below the US$ 5,167 in October and the US$ 5,790 in September.

Warm yearDespite the reduction in beef exports in October, the accumulated total foreign sales of proteins from January to October reached 6.12 million tons, with revenues of US$ 15.5 billion. Both values ​​surpass those of the same period in 2020.

SoyThere are still a few days of exports, but the pace of soybeans is also strong this month. Upon reaching 286,000 tonnes per day, the country shipped 299% more than in November of the year. The price rose 39%.

EthanolFuel is paying a higher premium than sugar, according to S&P Global Platts Analytics. With that, the cane used in the production of sugar in the center-south drops to 36.2% in the second half of October. Last year, it was 43.5%.

Olive oilWorld production rises to 3.16 million tons in 2021/22, above consumption, which will be 3.15 million, according to the OIV (international organization of the sector) and the European Union.

quite activeAccording to the OIC (International Olive Oil Council), Brazil is very active in this sector. In the last two harvests, the country imported an average of 97 thousand tons of the product.