USDA attache says imports of US soybean, corn into Brazil face many hurdles

New Delhi — Brazilian buyers looking to import US soybean and corn into Brazil face several hurdles due to current price spreads and several regulatory and logistical challenges, the US Department of Agriculture's Brazil attache said in a report Oct. 19.

On Oct. 16, Brazil said it would suspend the import tariffs on corn, soybeans, soy meal and soy oil from countries outside the Mercosur trade bloc.

The tariff on corn and soy imports from outside Mercosur is currently 8%, for soy meal 6%, and for soy oil 10%.

The import tariff waiver will apply to soybean and soy products until Jan. 15, 2021, and for corn imports until March 31, 2021.

The decision to suspend import tariffs on the commodities will be published in the Brazilian Federal Register in the next couple of days and will come into force the same day, the USDA's Brazil's attache said in the report.

The first stumbling block in importing the commodities is the asynchrony of approvals of genetically modified corn and soybean varieties between the US and Brazil.

There are at least nine commercially available biotech varieties of both corn and soybeans approved for cultivation in the US that are not currently approved in Brazil, the report said, quoting data from the International Service for the Acquisition of Agri-Biotech Applications.

"As grains are not sorted by varieties prior to export, any potential Brazilian importer would need to submit a special approval request to the National Technical Commission on Biosecurity (CTNBio). There are only two CTNBio meetings scheduled for the rest of 2020, and each request, if submitted, would have to be considered on case by case basis," the report said.

Moreover, Brazil's bulk grain and oilseed port terminals are set up specifically to handle exports, and reverse engineering the setup is time- and resource-intensive, the report said.

Also, most soybean crushing plants are in the interior of the country, far from the ports, which raises costs and therefore is a limiting factor in importing soybeans from the US.

In addition, the current spread between US and Brazilian soybean prices makes it unattractive for imports, the report said.

While Brazil is the largest exporter of soybean and the second-largest exporter of corn, the country has seen local prices of the commodities surge due to strong domestic and export demand.

The sustained rise in domestic corn and soybean prices has put the profit margins of local animal protein producers under pressure, since soybean meal and corn account for 70% of the cost of production of chicken and pork.

Brazil has decided to lower the tax on corn and soybean temporarily hoping to reduce the prices.