Brazilian wheat industry complains of imports from Argentina

The president of the Union of Wheat Industries of the states of Rio de Janeiro and Espírito Santo (“Sinditrigo”), Antenor Barros Leal, claims that an increase in imports of wheat from Argentina is causing damage to Brazil. Leal admits that the product from Argentina is cheaper and of higher quality, but says what is taking place is “an unjust and disloyal, causing a loss of market share for Brazilian producers.”

Leal adds that Argentine wheat receives subsidies.

Meanwhile, Benedito Rosa, a director at the Ministry of Agriculture (“Assuntos Comerciais Internos da Secretaria de Relações Internacionais do Ministério da Agricultura”), says the complaints by Sinditrigo are justified in that there has been a sharp rise in the use of wheat from Argentina to make flour in Brazil. However, Rosa points out that Brazil has a shortfall in wheat production and must import to meet domestic demand. “This is a case of zero tariffs, proximity and good quality,” he says in describing Argentine wheat.

As for subsidies, which Sinditrigo charges are given to Argentine wheat, Rosa says he is not aware of them.

Brazilian wheat producers have clamored for an import tariff that would be the same on wheat as flour (there is a ten-point difference). What is happening is that cheap Argentine wheat enters Brazil, is used to make flour in Brazil. As a result, Brazilian flour producers get hit with lost income and a smaller market share (around 80% of the bread made in Brazil uses better quality (durum) wheat, most of which comes from Argentina, for the simple reason that not enough of it is produced in Brazil).

The amount of Argentine wheat used in all of Brazil as a percentage of total wheat usage has risen from 2.6% in 2002, to 8% at the moment. However, in southern Brazil, the presence of Argentine wheat is much, much higher, reaching 30% in Paraná and Santa Catarina. Brazil’s annual consumption of wheat is 12 million tons, with domestic production at 5 million tons. Experiments are underway to discover a variety of wheat that can be more productive in Brazilian soil and climate, but such a permanent solution will take time.

According to the Secretariat of Foreign Trade (“Secex”), as long as there is a Southern Cone Common Market (“Mercosul”) there will be wheat imports from Argentina.