Press Release: Brazil’s Crop Producers Lose with U.S. Farm Bill

Crop Producers in Brazil Lose US$ 4.34 Billion with U.S. Subsidies

Brasília, March 26, 2014- The president of the Confederation of Agriculture and Livestock of Brazil (CNA), Senator Katia Abreu, announced on Wednesday the creation of an observatory to monitor the process of implementation of both the U.S. Farm Bill and the Common Agricultural Policy (CAP) of the European Union.  There are concerns that U.S. subsidies could cause damage to farmers, compromising the performance of Brazilian agriculture abroad.  The recently approved policies by the U.S. will result in a loss of US$ 4.34 billion for Brazilian exporters of corn, soy, and cotton between 2014 and 2018.  

 CNA projects that Brazilian soy producers will lose US$ 2.5 billion in exports, based on an annual average annual loss of US$ 480 million between 2014 and 2018. American incentives will result in a 3% decline in the price of grain.  For corn, CNA estimates a total US$ 1.5 billion loss with an annual impact of US$ 280 million and a price reduction of 4%.  Brazilian Cotton producers will lose a total of US$ 340 million with an annual loss of US$ 70 million and will experience a 4% decrease in price.

 The numbers are part of the study “Agricultural Policy of the United States and the European Union: Impact on Brazilian Agribusiness,” prepared by Agroicone Consulting at the request of CNA.  It is the first formal position of agribusiness on incentives since the WTO (World Trade Organization) cotton dispute in 2010.  

The unpublished research was presented on Wednesday at CNA headquarters in Brasilia, where a seminar attended by experts and officials from 14 countries was held.  In addition, both Neri Geller, the Minister of Agriculture, Livestock and Supply (MAPA) and Paulo Mesquita, director of the Economic Department of the Ministry of Foreign Affairs were present.

 Harmful Subsidies

 Other data indicators also worry CNA.  The new U.S. Farm Bill will allow grants totaling US$ 64.5 billion to U.S. producers for the three commodities.  ”The crop production sector [in Brazil] is outraged by the size of these harmful subsidies, which can both expand the production area in the United States and cause a depression of prices in the international market,”  said Senator Abreu.

 The president of the International Relations Committee of CNA, Eduardo Riedel, says the U.S. law “may affect soybean exports from Brazil.”  This is the first time the crop has entered the American soybean subsidy program. In recent years, U.S. producers of soybeans – the main export item in the agenda of Brazil – received no subsidies from Washington, but are now covered with political support in the package approved in February. Brazilian exports of soybeans, meal and oil generated US$ 30.96 billion in 2013, surpassing the performance of oil and derivatives (US$ 22.37 billion).  The aid comes as Brazil seeks to overcome U.S. production to become the largest producer of the grain.  The official expectation is a harvest of 854 million tons, which is a reduced forecast from earlier this year at 4.6 million tons.  He also stressed the possible damages that the policy of income insurance may cause to other products, such as corn.  The study points to the possibility of a decline of 4% in the international price of grain.

 Riedel endorsed the president of CNA for private initiative.  Executive and Legislative Brazilians work jointly in assessing such impacts . The idea has been accepted by both the Ministry of Agriculture and Ministry of Foreign Affairs and is represented by the Director of the Economic Department and the chairman of the Agriculture and Parliamentary Front (APF), Luiz Carlos Heinze (PP – RS).  Ambassador Clodoaldo Hugueney, a consultant at CNA, was also one of the coordinators of the debate.

 Another one of the changes highlighted by the president of CNA is the transfer of direct payments for agricultural insurance. This will keep the distorted effect of previous programs because the insurance guarantees income to the producer at any price point .  “It is clear that Americans are not seeking efficiency and productivity. They are rewarding only the amount,” says Senator Abreu.  This perception is shared by Mark Langevin, the International Relations chairperson of the Brazilian Association of Cotton Producers (Abrapa) in the United States.  For him, the new law does not “bring great stimulus to increase crop yields.” 

 According to the director of Agroicone, André Nassar, who led the study, ”even with the remunerative prices, subsidies reduce the risk to producers and will respond to government incentives.”  He says that the impact on corn and soy were big surprises for Brazil.  Horrys Fiança, the agricultural attaché of the Embassy of Brazil in Washington, believes that despite the 2 % cut in the budget, the new farm bill should implement greater spending to direct payments of subsidies to U.S. producers, due to the adjustment of minimum prices.

 Although the U.S. Farm Bill dominates the debates, the European Common Agricultural Policy (CAP) was also discussed by the experts. The representative of CNA in Brussels, Maria Almeida, said that Brazil needs to pay attention to the issue of sugar. Commodity exports are limited to 1.3 million tons / year without payment of benefit to foreign sales . However, export quotas will cease to exist by 2017, which could cause Europe to further increase their exports and to grant subsidies to their exporters, impacting the international market.

 Links:

 CNA Notícias Do Dia (News of the day)

 CNA Notícias Do Dia (News of the day)

 CNA Brasil website

 

Press Release: Brazil’s Crop Producers face Losses with U.S. Farm Bill

logoticCrop Producers in Brazil Lose US$ 4.34 Billion with U.S. Subsidies

Brasília, March 26, 2014- The president of the Confederation of Agriculture and Livestock of Brazil (CNA), Senator Katia Abreu, announced on Wednesday the creation of an observatory to monitor the process of implementation of both the U.S. Farm Bill and the Common Agricultural Policy (CAP) of the European Union.  There are concerns that U.S. subsidies could cause damage to farmers, compromising the performance of Brazilian agriculture abroad.  The recently approved policies by the U.S. will result in a loss of US$ 4.34 billion for Brazilian exporters of corn, soy, and cotton between 2014 and 2018.  

 CNA projects that Brazilian soy producers will lose US$ 2.5 billion in exports, based on an annual average annual loss of US$ 480 million between 2014 and 2018. American incentives will result in a 3% decline in the price of grain.  For corn, CNA estimates a total US$ 1.5 billion loss with an annual impact of US$ 280 million and a price reduction of 4%.  Brazilian Cotton producers will lose a total of US$ 340 million with an annual loss of US$ 70 million and will experience a 4% decrease in price.

 The numbers are part of the study “Agricultural Policy of the United States and the European Union: Impact on Brazilian Agribusiness,” prepared by Agroicone Consulting at the request of CNA.  It is the first formal position of agribusiness on incentives since the WTO (World Trade Organization) cotton dispute in 2010.  

The unpublished research was presented on Wednesday at CNA headquarters in Brasilia, where a seminar attended by experts and officials from 14 countries was held.  In addition, both Neri Geller, the Minister of Agriculture, Livestock and Supply (MAPA) and Paulo Mesquita, director of the Economic Department of the Ministry of Foreign Affairs were present.

 Harmful Subsidies

 Other data indicators also worry CNA.  The new U.S. Farm Bill will allow grants totaling US$ 64.5 billion to U.S. producers for the three commodities.  ”The crop production sector [in Brazil] is outraged by the size of these harmful subsidies, which can both expand the production area in the United States and cause a depression of prices in the international market,”  said Senator Abreu.

 The president of the International Relations Committee of CNA, Eduardo Riedel, says the U.S. law “may affect soybean exports from Brazil.”  This is the first time the crop has entered the American soybean subsidy program. In recent years, U.S. producers of soybeans – the main export item in the agenda of Brazil – received no subsidies from Washington, but are now covered with political support in the package approved in February. Brazilian exports of soybeans, meal and oil generated US$ 30.96 billion in 2013, surpassing the performance of oil and derivatives (US$ 22.37 billion).  The aid comes as Brazil seeks to overcome U.S. production to become the largest producer of the grain.  The official expectation is a harvest of 854 million tons, which is a reduced forecast from earlier this year at 4.6 million tons.  He also stressed the possible damages that the policy of income insurance may cause to other products, such as corn.  The study points to the possibility of a decline of 4% in the international price of grain.

 Riedel endorsed the president of CNA for private initiative.  Executive and Legislative Brazilians work jointly in assessing such impacts . The idea has been accepted by both the Ministry of Agriculture and Ministry of Foreign Affairs and is represented by the Director of the Economic Department and the chairman of the Agriculture and Parliamentary Front (APF), Luiz Carlos Heinze (PP – RS).  Ambassador Clodoaldo Hugueney, a consultant at CNA, was also one of the coordinators of the debate.

 Another one of the changes highlighted by the president of CNA is the transfer of direct payments for agricultural insurance. This will keep the distorted effect of previous programs because the insurance guarantees income to the producer at any price point .  “It is clear that Americans are not seeking efficiency and productivity. They are rewarding only the amount,” says Senator Abreu.  This perception is shared by Mark Langevin, the International Relations chairperson of the Brazilian Association of Cotton Producers (Abrapa) in the United States.  For him, the new law does not “bring great stimulus to increase crop yields.” 

 According to the director of Agroicone, André Nassar, who led the study, ”even with the remunerative prices, subsidies reduce the risk to producers and will respond to government incentives.”  He says that the impact on corn and soy were big surprises for Brazil.  Horrys Fiança, the agricultural attaché of the Embassy of Brazil in Washington, believes that despite the 2 % cut in the budget, the new farm bill should implement greater spending to direct payments of subsidies to U.S. producers, due to the adjustment of minimum prices.

 Although the U.S. Farm Bill dominates the debates, the European Common Agricultural Policy (CAP) was also discussed by the experts. The representative of CNA in Brussels, Maria Almeida, said that Brazil needs to pay attention to the issue of sugar. Commodity exports are limited to 1.3 million tons / year without payment of benefit to foreign sales . However, export quotas will cease to exist by 2017, which could cause Europe to further increase their exports and to grant subsidies to their exporters, impacting the international market.

 Links:

 CNA Notícias Do Dia (News of the day)

 CNA Notícias Do Dia (News of the day)

 CNA Brasil website

 

Brazil grows wary of Venezuela under Maduro

 

Reuters reports that Brazil, Latin America’s biggest economy and diplomatic power, has toned down its support for Venezuelan President Nicolas Maduro because of disappointment over how he is handling mounting economic problems and opposition-led street protests.

The shift, while subtle, has deprived Maduro of some of the regional backing he wants at a time of food shortages, high inflation and political uncertainty in the OPEC nation.

Broadly speaking, Brazilian President Dilma Rousseff remains an ally of Maduro. While Rousseff is more moderate, both are part of a generation of leftist Latin American presidents who grew up opposing pro-Washington governments and believe they are united by a mission to help the poor.

However, Rousseff has been increasingly disappointed by some of Maduro’s actions and has reined in the more enthusiastic support that characterized Brazil-Venezuela relations under his predecessor, the late Hugo Chavez, according to two officials close to Rousseff’s government.

Rousseff is worried the Venezuelan government’s repression of recent street protests, and Maduro’s refusal to hold genuine dialogue with opposition leaders, may make the political crisis worse over time, the officials said.

Brazil Passes Internet Law

Today, Bloomberg reports that the law for Internet rights passed the lower house of Brazil’s Congress last night, advancing the bill after President Dilma Rousseff ended a six-month standoff by giving up on a measure she said would protect Brazilians from spying.

The removal of a requirement for companies to host data from Brazilian users within the country’s borders was a win for Google Inc. (GOOG) and Facebook Inc., which had lobbied against the provision. Rules preventing Internet service providers from favoring some types of Web traffic over others were left intact, despite resistance from phone carriers such as Oi SA and Telefonica Brasil SA.

The bill makes Brazil the leader among large countries in upholding the principle of net neutrality, in which providers must grant equal access to the entire Internet, without selectively blocking or slowing down services. With Brazil weeks away from hosting an international Internet conference, Rousseff chose to let the law advance, even with weaker provisions for the country’s oversight of its citizens’ data.

“Brazil is a giant country, and passage of this law will provide a model for implementing net neutrality as a policy measure in other major markets,” Katherine Maher, advocacy director for international digital rights organization Access, said by phone from Washington before the vote.

 

US Economic Recovery Boosts Brazilian IT Exports

Brazilian IT companies expect to increase their exports this year due to the recovery of the US economy and local currency devaluation, which has made their products more competitive. In 2012, the Brazilian software and IT service exports totaled US$ 2.2 billion, 14.67% higher than in 2011, according to the survey published by the IDC and Brazilian Association of Software Companies (ABES). In 2013, analysts estimate that Brazilian exports increased between 12% and 14%.

“For this year, we should repeat the same performance as last year and export growth will exceed domestic market rates”, said Jorge Sukarie, Abes CEO. The IDC forecasts a growth of 9.2% for the Information and Communication Technologies (ICT) sector this year.

The main markets for Brazilian software exports are Mexico, with a 14.1% share, Colombia (7.7%), the United States (7%) and Argentina (6.3%). The US accounts for almost 39% of the IT market and it is one of the main destinations for Brazilian exports, especially in the services area. Read the whole story here.

Volkswagen to Invest $4.25 billion in Brazil

 

The WSJ reports German auto maker Volkswagen AG plans to invest 10 billion Brazilian reais ($4.25 billion) in its operations in Latin America’s largest nation in the 2014-2018 period to develop new vehicles and new technologies, the company said in a news release over the weekend.

Brazil is the fourth largest consumer market for Volkswagen behind China, Germany and U.S. The investment program for the period represents an increase in the previous investment plan for the period between 2012 and 2016, which totaled BRL8.7 billion.

“The investment program shows our confidence in Brazil and shows that we are advancing in the modernization of our products,” said Volkswagen do Brasil Chief Executive Thomas Schmall.

The massive investment planned by Volkswagen comes at a challenging time for the vehicle industry in Brazil.

Yearly vehicle sales fell for the first time in a decade in 2013, even as output in Brazil’s auto industry was temporarily boosted by government incentives aimed at strengthening local production and boosting exports.

Brazil vehicle sales declined last year to 3.77 million vehicles from a record of 3.8 million autos sold in 2012, according to auto-maker association Anfavea. Inflation’s erosion of consumer spending power, together with rising interest rates, a volatile currency and disappointing economic growth, crimped vehicle purchases.