Long-sought opening of Brazilian wheat TRQ ahead

A significant impediment to U.S. wheat sales to the large Brazilian market is likely to end soon. Brazil's government has announced it intends to implement a tariff rate quota (TRQ) allowing up to 750,000 metric tons (MT) of wheat to be imported duty-free from countries outside the Mercosur trade agreement. 

 

Brazil first agreed to this TRQ some 24 years ago when it joined the World Trade Organization (WTO). The Brazilian government is now moving forward with developing a final process and date for implementing the TRQ. 

 

Through U.S. Wheat Associates (USW) and the U.S. government, wheat farmers have worked and negotiated for several years with Brazil's government to open the TRQ and create a more open market there for U.S. hard red winter (HRW) and soft red winter (SRW) wheat. 

 

"Brazil is a quality-focused wheat market and its flour millers recognize that U.S. wheat can help them better meet their customers' needs," said USW President Vince Peterson. "Opening the TRQ will give those millers more consistent access to our wheat classes while still having the option to source from other countries. That is how the market should work and we welcome this opportunity." 

 

"This is a perfect example of how fulfilling commitments can work for all trading partners," said Doug Goyings, USW Chairman and a wheat farmer from Paulding, Ohio. "We want to recognize Ambassador Gregg Doud, our Chief Agricultural Negotiator at the Office of the U.S. Trade Representative, and USDA Undersecretary for Trade and Foreign Agricultural Affairs Ted McKinney, as well as the career staff of USDA and USTR for their focus on this issue. They have raised it multiple times with their counterparts in Brazil." 

 

Brazil is the fourth largest wheat importer in the world but Argentina and other countries in the Mercosur agreement have had a competitive advantage with mostly unlimited duty-free access to the market. Wheat imports from countries outside the Mercosur agreement including the United States are subject to a 10 percent tariff. 

 

However, USW has always conducted activities in Brazil to keep its millers and bakers informed about the quality and value of U.S. wheat. As a result, when Brazil opened provisional TRQs in 2008, 2013 and 2014 because its Mercosur partners had wheat supply challenges, U.S. HRW and SRW made up more than 80 percent of imports.