Theremoval of some taxes, tariffs, and other trade restrictions in the early 1990shas fueled rapid growth in the Brazilian agricultural sector. In 2004, agriculture and alliedindustries accounted for 40% of Brazilian total exports and virtually all of a$34 billion trade surplus. Most of its support to producers is in the form of subsidizedcredit. Currently, Brazil is proposing $26.1 billion in various forms of creditassistance and agricultural production insurance.
Apartfrom subsidized credit, the Premio para Escoamento do Produto (PEP) program provides a premium for commercialbuyers of agricultural commodities that allow such buyers to then sell theproducts at a lower price. The PEPprogram has been used to lower the cost of internal transportation of cottonand as an export subsidy for Brazilian wheat. Commercial buyers purchase wheat from producers at theminimum price and receive government subsidies to be able to sell wheat on theworld market at a lower price.
Brazilis the world leader in biofuel production and exports. The central component of BrazilŐsethanol policy is a mandate that requires a 20-25% ethanol blend ingasoline. Other governmentalpolicies that support the ethanol industry are storage credits to millers,preferential tax treatment, and ethanol import restrictions. In 2005, a biodiesel mandate wasestablished that provided financing and tax incentives for biodiesel productionas well.
á Corn is the mostimportant grain crop grown in Brazil. Demand is driven mostly by an expandingdomestic livestock industry.
á Basic minimum price forcorn ranges from R$11.00/60kg to R$16.00/60kg ($2.17/bu to $3.16/bu).
á Basic minimum price forsorghum ranges from R$9.80/60kg to R$11.20/60kg ($1.93/bu to $2.21/bu).
á WTO bound import tarifffor corn is 48.3%.
á Brazil has become amajor exporter of cotton, ranking 5th in world cotton exports.Exports account for about 40% of Brazilian cotton production.
á Basic minimum supportprice for cotton lint is R$44.60/15 kg ($0.6289/lb).
á WTO bound import tarifffor cotton is 35%.
á Producer supportestimates for rice are higher than any other agricultural product in Brazil.
á Basic minimum supportprice for long rice ranges from R$10.12/60 kg to R$20.70/60kg ($3.57/cwt to$7.30/cwt).
á WTO bound import tarifffor rice is 55%.
á Brazil is the worldŐssecond largest producer of soybeans and rivals the United States as the worldŐsleading exporter.
á Basic minimum supportprice for soybeans ranges from R$13/60kg to R$14/60kg ($2.78 to $2.99/bu).
á BrazilŐs import tariffon soybeans of 8% is consistent with MERCOSURŐs Common External Tariff schedule(MERCOSUR is a trading block of South American countries that includesArgentina, Brazil, Paraguay, Uruguay, and Venezuela).
á Recent declines in theprofitability of soybean production have prompted the government to offer R$14billion (about $6 billion) of emergency assistance to soybean producers. This assistance will come in the formof R$5.7 billion ($2.5 billion) for marketing support; R$7.2 billion ($3.2billion) in rollover debt restructuring; and R$1 billion ($0.4 billion) inprice support.
á Brazil is the worldŐsleading producer of sugarcane, sugar, and ethanol. The governmentŐs policy regarding the production and use ofethanol appears to have the greatest impact on the sugar situation.
á WTO bound tariff forraw and refined sugar is 35%.
á Brazil is one of theworldŐs leading importers of wheat, with over 95% of imports coming fromArgentina.
á Phytosanitaryrestrictions have been used recently to prevent imports of wheat, specificallyfrom the U.S. and Ukraine.
á WTO bound import tarifffor wheat is 55%. The applied rateis 10% for wheat imported from non-MERCOSUR countries. Wheat is traded duty free withinMERCOSUR.