Dec 04, 2020

Brazil Company Requests Extension of Suspended Rice Tariff

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

One rice industry official is asking the Brazilian government to extend the deadline for the suspension of the tariff for rice imported from non-Mercosul countries. The suspension of the tariff was set to expire on December 31st, and he is requesting that it be extended to February 28th.

The suspension of the tariff was for 400,000 tons of rice imported before December 31, 2020, but Federation of Industries for the State of Minas Gerais (Fiemg) indicated that logistical problems are preventing them from importing rice before the deadline. They cited problems with a lack of containers and the high cost of containers for importing rice from India. They indicated that of the 25,000 tons of rice purchased in India, only 8,000 tons have arrived and the remainder will take 65 days to arrive in Brazil.

For their part, the Brazilian Association of Rice Industries (Abiarroz) indicated that the company in Minas Gerais is not part of their association and none of their members have requested the extension. They feel there will be 200,000 tons of rice imported before the suspension ends.

During the month of October, most of Brazil's rice imports were from Uruguay, Paraguay, and Argentina who are all part of the Mercosul trading block. Even with the rice imports, the prices of rice in Brazil are still near historic highs. The price of rice last week in Rio Grande do Sul, which is Brazil's largest rice producing state, was R$ 102.65 per sack of 50 kilograms, which was not much different from the record high price of R$ 106.34 per sack of 50 kilograms set earlier this year.

It is estimated that rice from the U.S. would arrive in Brazil at a price of R$ 109.00 per sack of 50 kilograms without the tariff and R$ 123.00 per sack with the tariff. Rice from other Mercosul countries would arrive in Brazil at a cost of R$ 112 to 115 per sack. Therefore, rice from the U.S. is very competitive with rice from Brazil's neighbors.

Additionally, there are concerns about the potential yields of the 2020/21 rice crop in Rio Grande do Sul. All the rice in the state is irrigated and a prolonged period of dry weather has led to low water levels in the reservoirs used to irrigate the rice.