Markets

US farmers to tap into Brazil wheat opportunity

Grain Central, March 25, 2019

IN an agreement announced last week between the United States and Brazil, Brazil has agreed to implement a duty-free tariff rate quota (TRQ) for wheat under a longstanding obligation under Brazil’s World Trade Organisation (WTO) commitments.

The agreement opens an annual opportunity for US wheat farmers to compete for 750,000 metric tons of wheat under the TRQ.

Brazil was the largest wheat importer in Latin America and the fourth largest in the world in marketing year 2017/18.

Most imports originate duty-free from the Mercosur countries of Argentina, Paraguay and Uruguay.

Wheat from all other origins requires payment of a 10 per cent duty.

In 1995 Brazil agreed to open the TRQ to all origins, including the United States, but then notified the WTO that it wanted to remove the TRQ. Those negotiations were never concluded.

Brazil did open the TRQ temporarily in 2008, 2013, and 2014 when there was a shortage of wheat within Mercosur. During those years US wheat made up more than 80pc of imports from outside Mercosur.

Chris Kolstad

US Wheat Associates chairman and wheat farmer from Ledger, Montana, Chris Kolstad said: “This new opportunity gives us the chance to apply funding from the Agricultural Trade Program and other programs to build stronger relationships with Brazilian millers and a more consistent market there for U.S. wheat.”

US National Association of Wheat Growers president and wheat farmer from Lavon, Texas, Ben Scholz said: “I’m glad to see Brazil fulfil its commitment and look forward to a stronger trading relationship between us. When countries remain in compliance with the WTO, like we see here, it creates a level playing field for wheat for both countries.

“In some years, Brazil has imported as little as 115,000 tonnes of US hard red winter and soft red winter wheat. That is why USW has worked toward implementation of Brazil’s wheat TRQ for a decade. USW plans to invest export market development funding in technical support and trade servicing to help demonstrate the quality and value of US wheat for millers and bakers.”

Source: US Wheat Associates, NAWG

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