INCREASE IN ARGENTINA’S EXPORT TAXES WILL TAKE PRICE ON WHEAT FOR BRAZILIAN INDUSTRY

The Brazilian Association of Industries of Biscuits, Pasta and Industrialized Bread & Cakes (Abimapi) issued a note in which it deals with the impacts that the tax increase in Argentina on agricultural exports will bring to the prices of the sector’s inputs. Between 2017 and 2018, the total consumption of wheat in Brazil was 11.3 million tons. Of this number, over 80% come from Argentina. With the decree issued by Argentine President Alberto Fernández, the 4 pesos per dollar tax ceiling set by the government of former President Mauricio Macri loses effect and rates will return to 12%. According to Abimapi, 70% of the cost of the industrialized biscuits, pasta, breads and cakes sector is flour. According to the association’s CEO, Claudio Zanão, this increase cannot be fully absorbed by the industry. In any case, this transfer tends to be gradual (between the end of this year and the first months of 2020), as there is no room to raise prices at one time for the final consumer. In addition, industries are stocked (two to three months, depending on each manufacturer) of wheat and finished goods, except those that are closing wheat purchase contracts after the decree.
Source: Universo agro