Brazil hikes export duties on agricultural products

19-Jun-2024 02:15 PM

Brasilia. In a surprise move, Brazil's president last week announced a temporary measure that limits the use of PIS/Coffins credits and results in higher tax rates for those engaged in exports of agricultural products.

The reduction in the limit on the use of these credits will not only affect the trade of agricultural products but will also lead to an increase in fuel prices and transportation costs. Producers and exporters will face more difficulties in villages or areas that are far from ports.

It is not clear which commodities will be affected by this government move, but it appears that this could cost crushers and exporters an additional $10-15 per tonne.

The government's decision, which has come into effect with immediate effect, will remain valid for 120 days but can be extended further only if the Brazilian parliament approves it.

In the initial phase, this decision is expected to cause a huge shock to the soybean market. Trading companies are evaluating its impact and consequences.

Some MPs are pressuring the government to withdraw this decision. However, the President has said that such a step has been taken due to an unexpected huge drop in government revenue. This has been implemented for only four months.