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Taxes On Crops Slow Brazilian Soybean Exports
The nightmare of possibly having export taxes on soybeans and corn that would shrink the profits of farmers is back in Brazil, and this can affect the grain markets in general. Though not likely to pass, some state lawmakers from Mato Grosso, the largest soybean producing state in the country, have discussed a draft that would impose an effective export tax on soybeans produced in there. The governor of Mato Grosso, Pedro Taques, says he is against the idea, but his own allies suggest this could be a way to help with the state’s financial crisis, which had put officials without salary payments.
The neighboring state of Goiás, the fourth-largest producer of soybeans, previously had imposed a quota of 70% of exportable soybeans in that state. Any exports overcoming that amount would be taxed. This decision was revoked by the governor of Goiás, Marconi Perillo. Yet, in June he decided to step back and publish the decree again. Most experts say this measure would create market distortions and move trading companies to other states.
The only state in Brazil that has export taxes on soybeans is currently Mato Grosso do Sul, which recently became a significant producer of corn. In the neighboring country of Argentina, export taxes had affected all grains in the past and almost have created a monoculture of soybeans that was the only profitable agricultural business. In Brazil, some suggest that a national export tax could be created, but officials deny.
“These export taxes are not interesting for anybody. It is unlikely [to have export taxes in Mato Grosso]. But we can never doubt anything about our politicians. I think this is having some impact on soybean sales, adding to our economic uncertainty,” said Frederico Schmidt, a market analyst at Priore Investimento, based in Curitiba, Paraná.
At this point, with a stronger real (US$ 1 = 3.22), the Brazilian soybean market is weak, but that is also happening because a lot of the stocks of this year’s crop were sold last year and along the first semester.
“The crop is smaller than expected, the exports advanced quickly in the first months of the year, and the domestic prices had beaten records,” affirmed Steve Cachia of consultancy Cerealpar from Curitiba.
Rui Prado, president of the Federation of Agriculture and Livestock of Mato Grosso, rejects any idea involving new taxes. “The export taxes on commodities would be catastrophic for the agricultural business. The tenants cannot have profits. Our corn crop is shorter than expected. The soyben crop in the state is sold out, and the cotton crop is also 20% to 25% shorter,” Prado revealed to Agriculture.com.