WASHINGTON, DC, US — Working with the Brazilian Association of Fuel Importers (ABICOM), the US Grains Council (USGC) played a key role in the Brazilian government eliminating the duty on all ethanol imports until Dec. 31.
The US ethanol industry has been in intense discussions with the Brazilian government about the country’s ethanol tariff rate quota (TRQ) for nearly five years. In December 2020, Brazil applied a 20% duty on all US ethanol imports as a measure to protect the domestic industry following the COVID-19 pandemic.
The USGC worked to reverse the decision by approaching possible in-country partners that could share trade interests. It found an ally in ABICOM, which represents 85% of the fuel supply market.
After various meetings, ABICOM agreed to work with the USGC to develop a formal request to the Brazilian Foreign Trade Chamber (CAMEX) to drop the 20% duty on US ethanol imports as the best solution to alleviate supply shortages and the resultant price inflation in the north and northeast regions of Brazil.
ABICOM believed that by zeroing the duty, the country would guarantee a reduction of R$0.18 per liter ($0.15/gallon) in the gasoline prices at the pump. Once presented with the plea to the CAMEX, the USGC helped the association reach the ministries involved in the decision to present its arguments, supported by its close relationship with key contacts in the Brazilian government.
As a consequence, the Ministry of Economy performed its own analysis of the information provided, confirming the reductions in price ($0.16/gallon) and driving the Brazilian government to eliminate the duty on all ethanol imports until Dec. 31, as a measure to reduce inflation in the country.
Brazil is one of the largest ethanol export destinations for the US ethanol industry, with 76 million gallons of ethanol purchased in 2021, valued at $153 million. With the elimination of the duty, it is expected that import levels will grow by 20% in 2022 over 2021 import levels.