A new agreement between the U.S. and Brazil means U.S. wheat farmers will compete on a level playing field to sell their crop to that South American nation.
U.S. Wheat Associates and the National Association of Wheat Growers welcomed the news that Brazil has agreed to a duty-free tariff rate quota for wheat, a longstanding obligation under that nation’s World Trade Organization commitments.
The agreement opens an annual opportunity for U.S. wheat farmers to sell up to 750,000 metric tons — about 28 million bushels — of wheat tariff-free to Brazil under the TRQ, the two organizations said in a press release.
“Hopefully, this will be some good news for the market and all U.S. growers,” said Steve Mercer, vice president of communications for U.S. Wheat.
“We are grateful to the Trump administration for championing the interests of U.S. farmers and specifically to Chief Agricultural Negotiator Gregg Doud and USDA Under Secretary Ted McKinney for prioritizing the issue of Brazil’s TRQ commitment,” said Chris Kolstad, USW chairman and a wheat farmer from Ledger, Mont. “This new opportunity gives us the chance to apply funding from the Agricultural Trade Program and other programs to build stronger relationships with Brazilian millers and a more consistent market there for U.S. wheat.”
Brazil was the largest wheat importer in Latin America and the fourth largest in the world in the 2017-2018 marketing year. Most imports originate duty-free from the Mercosur countries of Argentina, Paraguay and Uruguay.
Mercosur is the South American trade bloc that includes Argentina, Brazil, Uruguay and Paraguay. Venezuela has been suspended as a member since 2016.
Wheat from all other nations has required a 10% duty. Brazil agreed to open its TRQ to all origins, including the U.S., in 1995, but then notified the WTO that it wanted to remove it. Those negotiations were never concluded.
Brazil did open the TRQ temporarily in 2008, 2013 and 2014 when there was a shortage of wheat within Mercosur. During those years U.S. wheat was more than 80 percent of imports from outside Mercosur.
“This is a big win for U.S. wheat farmers, the Trump administration, and members of Congress who have pushed for action on this issue,” said Ben Scholz, NAWG president and a wheat farmer from Lavon, Texas. “I’m glad to see Brazil fulfill its commitment and look forward to a stronger trading relationship between us. When countries remain in compliance with the WTO, like we see here, it creates a level playing field for wheat for both countries.”
In some years, Brazil has imported as little as 115,000 metric tons of U.S. hard red winter and soft red winter wheat.
Brazil does not purchase soft white wheat from the Pacific Northwest. Freight distances and rates from the region to the East Coast of South America are prohibitive, Mercer said.
The organization plans to invest export market development funding in technical support and trade servicing to help demonstrate the quality and value of U.S. wheat for millers and bakers.