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Brazil Wheat Import Tariff Kept Despite Low Supply

Source: Reuters
19/06/2009

Sao Paulo, June 18 - Brazil's foreign trade chamber kept a 10 percent import tariff on wheat bought from outside of the Mercosul South American trade bloc on Thursday, despite industry warnings of supply difficulties.

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Brazil's wheat industry association (Abitrigo) had asked the government on Thursday to allow 1 million tonnes of tariff-free wheat imports from outside Mercosul after dry weather cut the supply in its main supplier, neighboring Argentina.

"The decision could change eventually, but for now (the tariff) is being maintained," said Agriculture Minister Reinhold Stephanes, who said Brazil had enough wheat stocks to tide it over to its next harvest.

Argentina imposed restrictions on exports of wheat in an attempt to keep its domestic market supplied and contain food inflation.

But despite wheat growers losing out after such a tariff cut last year allowed more foreign wheat into the country and lowered prices, Abitrigo insists imports from afar will be necessary again to avoid a sharp rise in the price of flour.

The association said it preferred not to comment on the government's decision when contacted by Reuters.

The Brazilian government has been keen to get local mills to import Russian wheat, as it hopes it would prompt Russia to open its lucrative meats market to more Brazilian imports.

But local mills have been reluctant to order Russian wheat and some sources in the sector say the government has been hinting at suspending the tariff if they show willingness to buy the Russian produce.

Brazilian milling industry officials recently went to Canada to inspect wheat for sale there.

Brazil grows enough wheat to meet around half of its needs but much of the crop is of the soft variety better suited to biscuits and sweet foods rather than the hard type most suited to bread making.



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