On Tuesday a Brazilian association of biodiesel producers called Ubrabio, presented a proposal for the government to retain 10% of soybean export earnings. According to Reuters, Ubrabio states that the programme is to help the local soybean crushing industry.
In order to help boost the sales of soymeal all money collected would be proportionately distributed among crushers. This would help them to compete within international markets whilst also boosting their capacity to buy soybeans in the domestic market, subsequently competing with exporters.
Ubrabio’s chairman, Juan Diego Ferrés is responsible for designing the proposal and told Reuters that the idea was to compensate processors for the market distortion that was caused by the trade dispute between the United States and China.
Reuters reports that soaring Brazilian soybean exports were caused by the tit-for-tat trade tariffs imposed by the world’s two largest economies. The higher export charges lead to a decrease in local supplies and a sharp increase in domestic bean prices.
Ferrés told Reuters that, “What is happening is only good for the farmers. It is impacting Brazil’s soy processing industry.” This is due to plants having to pay more for the beans and therefore being unable to compete in the international soymeal and soyoil markets.
Ubrabio have estimated that a 10% retention on earnings from soybean exports would generate around $3.14 billion in 2019. The biodiesel association is trying to gather as much support from other farm groups in Brazil in a bid to try and convince the government of right-wing President-elect Jair Bolsonaro, to adopt the export earnings idea.