Brazil removes tariffs on rice imports until year-end following floods

Brazil will allow tariff-free imports of non-parboiled and polished rice with immediate effect and until Dec. 31, 2024, according to a notification published by its trade ministry.

The measure will enable the government to prevent acute shortages of the Brazilian staple food and potentially force rising domestic prices lower in the wake of deadly floods in Rio Grande do Sul state, which grows two thirds of the country's rice.

The exemption will apply to rice with Brazilian import codes (NCM) 10061092 and 10062020 which usually pay a 9% tariff and 10063021 on which a 10.8% tariff usually applies, according to an update to the federal government's list of tariff-exempted products.

The governmental food security and supply agency, Conab, was due to launch a tender on May 21 for the purchase of up to 104,000 mt of milled rice but the entity said that this has been suspended and a new date would be announced. The tender documents detailed that the rice was to be delivered to the country pre-packed in 2kg units displaying the federal government seal and price of 8 reals, equating to $0.78 per kilo, to prevent price gouging.

Analyses on Brazilian agricultural publications have highlighted a rift between the government and rice producers' associations over the government's plans, which farmers argue could impose losses on them and prompt lower planting next season. Farmers wanted a cap on tariff-free imports.

"It could cause significant problems (with no cap) because Asian prices are more competitive. The retail sector can buy pre-packed rice from other countries and that could jeopardize the (local) mills that do this," one exporter said.

Exporters say that farmers are demanding excessive sums for their produce and have mostly downplayed talk of huge losses, arguing that 85-90% of Rio Grande do Sul's rice had been harvested prior to the floods and that some of the remainder was in unaffected areas.

They acknowledge however that the extent of the damage will only be known once floodwaters drain away, something that has been delayed by further days of rain.

"We believe it will take a couple of weeks to be kind of normal," one exporter said.

While Brazil's Rio Grande do Sul port was operating normally, according to one exporter, business is likely to be thin once roads fully re-open. Exporters acknowledge that their current offers between $880-$1,000/mt stand no chance of appealing to importers who have cheaper options.

"It's hard to sell based on $1,000/mt. We're not making a lot of offers because this is quite a sum," one exporter said.