Grain Traders Challenge New Export Tax in Brazil Court

By Ana Mano

SAO PAULO, Feb 21 (Reuters) – The Brazilian state of Maranhao on Friday defended its new law imposing a 1.8% levy on grain exports after an industry lobby representing large global traders launched a legal challenge against the tax.

Under the new law, which will take effect next week, an export tax will be charged on shipments of grains such as soybeans, corn, sorghum, and millet.

Maranhao state said proceeds from the new levy will go towards investments in logistics, benefiting the entire agribusiness sector. In a statement on Friday, it defended the measure as constitutional and aligned with the provisions of Brazil’s recent tax reform.

Critics of the new tax, however, say it deals a blow to farmers and grain handlers operating in Brazil, potentially making the country less competitive against rivals such as the United States and Argentina in world markets.

Maranhao’s port of Itaqui is one of northern Brazil’s most important grain export hubs.

Abiove, which represents global grain merchants including ADM ADM.N, Bunge BG.N, Cargill, and Louis Dreyfus, filed a suit against the levy on Thursday, Abiove head Andre Nassar told Reuters in an interview late on the same day.

The new tax spurs legal insecurity and erodes profitability, he added.

“Grain trading is a low margin business, 1.8% is bigger than the margin of the business,” Nassar said.

In 2024, nearly 14 million tons of soybeans worth $6.1 billion were shipped from Itaqui, according to trade data provided by Abiove. Itaqui’s total shipped volume for corn was about 4.3 million tons, worth some $859 million.

Another new tax law in Para state taking effect next month is worrying local soy and corn farmers, said Vanderlei Ataides, head of local farmer lobby Aprosoja Para.

The law imposes a 4.32 real ($0.7565) charge on a 60-kilo soybean bag and a 2.09 real ($0.3660) charge on a 60-kilo corn bag.

Abiove said it is unclear who will pay the new Para tax, if it would be farmers or buyers.

Ataides said talks are ongoing to reduce the tax and or to postpone enforcement of the new Para law.

“Buyers have disappeared,” Ataides said, referring to grain traders scrambling to make sense of the new Para law, which will be enforced as local farmers harvest their new soy.

(Reporting by Ana Mano in Sao Paulo; Editing by Nia Williams and David Evans)