Lula reversed a measure that hurt soybean producers, but the sector remains disgruntled.

Lula da Silva’s government backed away from a move that caused concern among Brazilian soybean producers, who compared it to the Argentine moratorium. This is Provisional Measure 1227 (MP), which modified the use of tax credits generated by the payment of taxes. It is the government’s justification that the resolution sought Fix the distortions in the national tax system without increasing taxes.

Brazilian soybean producers grouped in Abrosoja welcomed the change in decision, but initially warned that the proposed move was a bad sign. “Already It started affecting the cash flow of the companies, creating the risk of unemployment, reduced investment and increased inflation. In the case of agri-businesses that procure, process and export grains, the MP violates the export duty exemptions guaranteed by the Kandir Act. This loss of profits of the industry has already been transferred to the grain producers,” they said.

Despite Lula’s government backtracking, soybean farmers vowed that they had “no more reason to celebrate.” “By issuing a temporary measure, it came into effect on June 4 and took the entire manufacturing sector by surprise. The government has created an important political divide in the debate over tax reform. How is the sector going to trust the government’s proposals that claim to work on non-accumulation of loans to quickly recover these loans and instead issue a temporary measure?” they warned.Abrosoja.

Later they added: “Reversing this breach of trust created by the release of the MP is a very difficult task. In this sense, the government has to sit at the table to negotiate and work with the manufacturing sector. Differently than it has been doing so far.” “This improper action was adopted under the pretext of increasing federal revenue, however, the real problem of controlling excessive public spending has yet to materialize.”