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BRAZIL COUNTRY PROFILE AND MARKET STUDY

Sub-directorate: Asia and Americas

Directorate: International Trade Department of Agriculture, Forestry and Fisheries

September 2016 Author: Mrs Tshilidzi Sheila Netshiozwi (SheilaN@nda.agric.za)

Disclaimer

The Department of Agriculture, Forestry and Fisheries takes no responsibility for any

action undertaken based on information from this study. This is a desktop study and own research must be undertaken, before decisions are made based on this study

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Table of Contents 1. Introduction .......................................................................................................................................... 3

2. Country facts ....................................................................................................................................... 4

3. Historical background......................................................................................................................... 5

4. Economic Overview ............................................................................................................................ 6

5. Infrastructure ....................................................................................................................................... 7

6. Risk profile ......................................................................................................................................... 10

7. Bilateral, Regional & Multilateral Trade Agreements .................................................................. 11

Brazil has been a WTO member since 1st January 1995. .............................................................. 11

8. Brazil’s Agriculture, Forestry and Fisheries Trade Structure & Product Analysis ................... 12

9. South Africa – Brazil trading relationship in agriculture, forestry and fisheries products ...... 18

Major imports and exports ................................................................................................................... 18

10. Trade & Tariff Policies .................................................................................................................. 20

Measures directly affecting imports into Brazil ............................................................................. 20

11. Agricultural Markets Accessibility ............................................................................................... 22

12. Trade potential analysis ............................................................................................................... 22

13. Conclusion ..................................................................................................................................... 23

Annexure 1 - Trade Potential Index methodology ............................................................................... 24

Annexure II ................................................................................................................................................ 25

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1. Introduction

There has been a major shift from the traditional trade of the developing

countries of the South with the developed countries of the North to a focus on

the promotion of South-South trade. South Africa also views trade with the

other developing counterparts in the South such as South America and Asia as

representing new markets with big growth opportunities. The purpose of the

study is to investigate available trade opportunities for South Africa’s (SA)

agriculture, fisheries and forestry products in one South partner, the Brazil

market.

Brazil is the world‘s 8th largest economy and the most populous country in

South America. Brazil is also one of the world’s strongest emerging

countries, contributing substantially to global growth. Brazil's economy

outweighs that of all other South American countries. However, Brazil’s

economy growth decreased in 2013 and the country went into recession in

2014. Brazil is currently faced with an economic and political crisis. President

Dilma Roussef’s removal from the office following an impeachment vote in the

senate, protests by the president’s supporters against the impeachment and

high level of corruption involving politicians on the state-oil company

Petrobras.

Although characterised generally by poor public services, insufficient

infrastructure, growing unemployment, income inequality, high poverty rate,

high inflation and political corruption, Brazil continues to seek to accomplish

industrial and agricultural growth and development. Notwithstanding the

challenges cited, like the negative economic circumstances from 2013 and the

current political crisis, Brazil, with its large market size (about 200 million

people), is considered a potential attractive trading partner.

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Brazil’s Agriculture sector contributes significantly to the exports. The main

products produced are coffee, soybeans, wheat, rice, corn, sugarcane, cocoa,

citrus and beef.

To get an understanding of the Brazilian market, a broad outlook of Brazil will

be reviewed to determine factors that could influence trade positively or

negatively in Brazil.

The outline of the study will be as follows: an overview of Brazil’s country facts

and historical background; Followed by a brief look at Brazil’s economic

factors; infrastructural development; risk profile and Brazil’s bilateral, regional

and international trade agreements as these have a direct bearing on trade

and trade related matters.

The last sections are to assist in determining trade potential for South African

products. The analysis of Brazil’s Agriculture, Fisheries, and Forestry

production and consumption to detect self-sufficiency; major imports and

exports; trade and tariff’s structure; market accessibility; and a Trade potential

Index (TPI), are aimed at revealing products with potential to be exported to

Brazil.

Lastly conclusions are drawn from the findings of the study.

.

2. Country facts1

Brazil is a Federal Republic with the largest area (i.e. 8 358 140 km²) and most

populous (i.e. 204 million) country in South America during 2015. The country

is situated in the eastern South America bordering the Atlantic Ocean. Brasilia

is the current capital city of Brazil.

1 CIA World Factbook,2016

5

Brazil has 5 Ethnic groups. White 47%; Mulatto (White combined with black)

43.1, Black 7.6%; Asian 1.1; and Indigenous 0.4%. Portuguese is the official

and most spoken language in Brazil, even though they also use Spanish,

German, Italian, Japanese, English and Amerindian. The most common

religion is Catholic and protestant (Adventist, Christian Assembly of God,

Universal kingdom of God). In Brazil 92% of the population aged 15 is literate.

Brazil falls under the countries with high human development index (HDI)2.

Brazil is ranked 75th out of 188 countries in the human development index with

an HDI value of 0.755 in 2014.

3. Historical background3

Brazil was a Portuguese colony subjected to an imperial mercantile policy for

three centuries until independence in 1882. It had three major large scale

economic production sectors, which are sugar, gold and coffee. Brazil was

dependent on enslaved African labour until the 19th century. Since then, Brazil

experienced a period of strong economic and demographic growth that led to a

mass immigration from Europe. After the 1882 independence, Brazil formed

the Empire of Brazil, which was a unitary state governed under a constitutional

monarchy and a parliamentary system. The country became a presidential

republic in 1889. Coffee exporters in Brazil dominated the country politically

until the populist leader Getulio Vargas rose into power in 1930. In 1964 an

authoritarian military came to power and ruled until 1985, after which civilian

governance resumed. Brazil is currently a Federal Republic based on the 1988

constitution.

2UNDP: Human development Report 2015: http://hdr.undp.org

3 CIA World Factbook,2016

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So far Brazil has had 36 presidents from 1891 to date, with the current

president, Dilma Rousseff, the first female president in Brazil.

4. Economic Overview4

Brazil’s economy is bigger than all other South American countries, because of

its large and well developed mining, agricultural, manufacturing and service

sectors. The country also has a lot of natural resources including water,

favourable climate and arable land, which boosts Brazil’s market to be one of

the largest in the world.

Since 2008, Brazil became a net external creditor and all three of the major

ratings agencies5 awarded investment grade status to its debt. Brazil

experienced strong growth in 2007 and first half of 2008. Brazil became one of

the first developing countries to recover from the 2008 World financial crisis.

During the recovery period Brazil reached a GDP growth rate of 7.5% and was

the highest experienced in the country for the past 25 years. Table 1 below

shows Brazil’s economic indicators during 2015.

Table 1: Brazil’s Economic indicators

GDP US $3.166 Trillion

World rank(GDP) 8th

GDP(per capita) US $15.800

World rank(GDP per capita) 101

Public debt(GDP) 67.4%

Exchange rate (Reals per US Dollar) 3.419

Inflation 10.6%

Unemployment rate 6.4%

Population below poverty line 21.45%

Population below extreme poverty line 4%

Source: CIA World Factbook 2015

4 www.worldbank.org

5 Moody’s Investor’s Services, Standard & Poor’s and Fitch Ratings

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Table 2. GDP contribution by sectors

Sector Contribution to

GDP(%)

Contribution

to labor

force%

Agriculture 5.9% 15.7%

Industrial 22.2% 13.3%

Services 71.9% 71%

Source: CIA World Factbook 2015

Table 2 above shows that, the services sector was the main contributor to the

GDP of Brazil in 2015 with 71.9% and contributing 71% to the labour force as

well.

5. Infrastructure6

Table 3: Brazil’s infrastructure

Transportation Communication

Airports

721

Telephones

44.1 million

Heliports

13

Mobiles

280.7 million

Railways

28.538 km

Broadcast media

More than 1000

radio stations. 138

TV stations with

more than 100

channels.

Roadways

1.580.964 km

Internet hosts

26.577 million

6 CIA World Factbook,2016

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Waterways

50.000 km

Internet users

108.2 million (53%

of the total

population)

Merchant marines

109

Ports

18

Source: CIA World Factbook, 2016

Brazil’s overall infrastructure is ranked seventy four out of 140 countries7. The

overall infrastructure has improved slightly between 2014 and 2015. The worst

are the airports and the roadways. Brazil has traditionally underinvested in

infrastructure projects. After many failed previous attempts to improve the state

of infrastructure, Brazil’s government initiated a plan to improve its

infrastructure in 2015. The plan involved the private sector companies to build

and operate roads, railways, ports and airports at an estimated value of $64.1

billion. This value covers the improvement of the existing infrastructure as well.

All new projects, aimed at improving the country’s productivity will start no later

than 2018, with railways being a priority in this government plan (Wall Street

Journal, June 9, 2015).

Transport8

Airports

Brazil has 721 airports and 130 of these airports are for commercial use and

30 are situated in the state capitals. The air transport quality has improved9

significantly in 2015 ranking 77th from 95th in 2014.The São Paulo-Guarulhos,

Brasilia, Campinas-Viracopos, Belo Horizonte and Rio de Janeiro have been

privatised.

7 The World Economic Forum, 201? .

8 The World Economic Forum ranks Brazil’s transport infrastructure 77

th out of 140

9 World Economic Forum

9

Railway

Brazil has inefficient railways and ranked ninety five10 . There was no

improvement between 2014 and 2015 in the quality of the railroads in Brazil.

Brazil doesn’t invest directly to the subways and urban trains constructions

because of inefficient electricity available to operate the railway transport.

Brazil’s railway was built to transport commodities not people hence

overcrowding in the trains because of routes shared between the cargo and

the passenger trains.

Roadways

Brazil’s roadway quality ranked 121th out of 140 countries according to the

World Economic Forum in 2015. There was no improvement in quality

between 2014 and 2015. Brazil has one of the largest highway systems in the

World, which is inadequate because it is the primary means of transport for

passengers and freight. 5.5% of the roads are paved, whilst 94.5% are

unpaved.

Communication system

Brazil’s telephone main lines in use ranked 8th whereas mobile cellular ranked

6th in the world. The telephone system in Brazil is very good and includes an

extensive microwave relay system and a satellite system with 64 stations.

Fixed lines connections have been relatively stable in the recent years,

standing at about 20 per 100 persons. The major driver in expanding the

telephone service has been the less expensive mobile cellular technology

accessible to lower income part of the population, at 120 per 100 persons.

Brazil has more than 1000 radio stations and more than 100 TV channels

operating, mostly privately owned.

Internet hosts amount to 26,577 million, ranking 3rd in the world. The internet

users are 75,982 million, ranking 4th in the world.

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World Economic Forum

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6. Risk profile11

Sovereign risk12: Moderate

Brazil’s size of the economy is very large with a growing active population. It is

characterised by advanced manufacturing industries and large domestic

market. Although it is marked by strong foreign direct investment and high

level of foreign reserves, Brazil is faced with deteriorating macroeconomic

trends. The GDP growth decreased by 3.8%, inflation at 10.6%, current

account at -3.3% and a public debt at 66% of the GDP.

Currency risk: Moderate

Amongst the major economies, Brazil’s Real has been one of the fastest falling

currency against the dollar. The political and economic instability in Brazil has

weakened the Real in the beginning of 2016. The new introduced business

friendly administration has led to the Real recovering. There is good

prospective for the new administration in Brazil.

Political risk: Moderate safety

Brazil has an effective political system that allows for democratic transfers of

power. The country has been surrounded by social tensions and corruptions.

Demonstrations were held against Ms Rousseff over corruption and how she

handled the economy. Brazil’s national oil company Petróleo Brasileiro

(Petrobras13) scandal has affected Brazil’s politics. This scandal involves the

leaders and politicians from the ruling coalition. The political instability is of

great concern because it raises questions of whether the government will be

able to restore order to the public finances.

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Country.eiu.com 12

The risk that a government could default on its debt (sovereign debt) or other obligations. Also, the risk generally associated with

investing in a particular country, or providing funds to its government. Also called country risk. 13

Formed in 1953 as Brazil’s national oil company, Petróleo Brasileiro is one of Latin America’s largest companies. The government

holds a majority stake, but it is also listed in São Paulo and New York and counts thousands of ordinary Brazilians among its shareholders.

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Economic structure risk: Moderate Risk

Brazil economy is built by a diversified economy, strong corporate sectors,

financial sectors, a low external debt burden, and diversified export industries

and markets. Brazil’s manufacturing sector’s competitiveness has decreased

because of the increasing labor costs, inadequate infrastructure and a heavy

tax burden. The manufacturing sector contributed 12.4% to the GDP in 2014.

The savings rate was below 16% in 2014. Brazil’s public debt burden and poor

economic performance weigh on the outlook, but the country's sound financial

system is supportive.

7. Bilateral, Regional & Multilateral Trade Agreements

Brazil has been a WTO member since 1st January 1995. Brazil is one of the

WTO's most active participants, individually, and within the WTO lobby groups

like BRICS, G20, and Cairns Group.

Brazil is a member of the Common Market of The South (MERCOSUR) since

26 March 1991, which is a customs union and trading bloc with Brazil,

Argentine, Paraguay, Uruguay and Venezuela (who was suspended from

MERCOSUR on 1 December 2016). MERCOSUR is Brazil's main preferential

agreement in terms of value of trade, comprising some 10% of its merchandise

trade.

Brazil signed the following as a MERCUSOR member state:

Free trade agreement with Israel, which was signed in September 2007 and

entered in force in September 2011.

Free trade agreement with Peru which was signed in November 2005

Free trade agreement with Bolivia which was signed in December 1996 and

entered in force in February 1997

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Free trade agreement with Chile which was signed in June 1996 and entered

into force in October 1996

Free trade agreement with Egypt which was signed in August 2010,

Free trade agreement with Palestine which was signed in December 2011

Preferential trade agreement with SACU which was signed in December

2008 and implemented in 2016 retrospectively to 1 March 2016.

Preferential trade agreement with Suriname which was signed in April 2005

and entered into force in July 2006

Preferential trade agreement with Colombia, Ecuador, Venezuela was signed

in October 2004

Preferential trade agreement with India which was signed in January 2004

and entered in force in June 2009

Preferential trade agreement with Mexico which was signed in September

2002 and entered into force in May 2003

Preferential trade agreement with Guyana was signed in June 2001 and

entered into force in May 2004

Preferential trade agreement with Brazil was signed in December 1990 and

entered into force in at the same time

Preferential trade agreement with Uruguay signed in September 1986 and

entered into force in October 1986

Framework agreement with Morocco signed in November 2004 and entered

into force in April 2010

Framework agreement with Mexico was signed in July 2002 and entered into

force in January 2006

8. Brazil’s Agriculture, Forestry and Fisheries Trade Structure &

Product Analysis

This section looks at Brazil’s major agricultural exports and imports together

with the main markets and suppliers. During 2011-2015, Brazil’s top

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agricultural export products were soybeans and Cane sugar. Table 13 below

shows that soybean was ranked 1st as Brazil agricultural export product.

Further, corn (maize) was ranked 5th as Brazil’s agricultural export product.

Brazil’s top 10 agricultural export products had a combined average value of R

584.5 billion during 2011-2015.

Table 13 Brazil top ten agricultural exports (2011-2015) in Billion Rands

2011 2012 2013 2014 2015 Average

Ave

Share

(%)

HS CODE

Agriculture Products

592.606 684.623 834.482 890.300 947.336 883.51

120190 Soybeans 0 139.804 219.683 248.027 261.911 173.89 19.68

170114 Cane Sugar 0 81.825 88.788 80.975 75.965 65.51 7.41

230400 Soybean Oilcake 41.171 54.443 66.077 75.540 74.012 62.25 7.05

090111 Coffee 58.607 46.953 44.007 65.644 70.757 57.19 6.47

100590 Corn (Maize) 19.666 44.732 60.349 42.632 66.516 47.50 5.38

020230 Meat Of Bovine

Animals 25.431 30.105 43.409 53.071 50.872. 46.78 5.29

020714 Chicken Cuts

And Edible Offal 32.418 35.045 40.478 48.391 50.458 41.36 4.68

020712 Meat & Offal Of

Chickens 18.970 20.241 26.991 26.341 29.169 40.58 4.59

240120 Tobacco 19.917 24.965 29.764 25.003 25.858 25.10 2.84

170199 Cane/Beet Sugar 24.582 23.283 25.677 21.808 22.231. 24.34 2.76

Source: Global Trade Atlas,2016

Table 14 below shows Brazil’s average top ten agricultural import products

between 2011 and 2015.The top ranked agricultural import products were

wheat & meslin and malt. Brazil’s top 10 agricultural import products had a

combined average value of R 19.4 billion during 2011-2015

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Table 14. Brazil top ten agricultural imports (2011-2015) in Billion Rands

2011 2012 2013 2014 2015 Average

Average

Share

(%)

HS CODE

Agricultural products

106.492 115.172 142.743 156.672 143.904 133.00

100199

Wheat And Meslin,

0 14.154 23.295 19.559 15.482 14.50 10.90

110710

Malt, Not Roasted 3.692 4.397 5.086 6.3494 5.283 4.96 3.73

200410

Potatoes, Prepared

0 1.890 3.581 4.658 4.776 2.98 2.24

100190

Wheat (Other Than Durum

Wheat 2.309 2.431 2.856 3.255 3.743 2.92 2.19

210690

Food Preparations 1.576 1.695 3.292 3.850 3.740 2.83 2.13

220421

Wine, Fr Grape 13.234 0.288 0 0 0 2.70 2.03

150910

Olive Oil/Fractions,

Virgin 1.571 2.122 2.833 3.258 3.239 2.61 1.96

230990

Animal Feed Prep 1.923 2.1565 2.475 3.138 3.308 2.60 1.96

151329

Palm Kernel Or Babassu Oil

1.649 2.025 2.869 3.170 2.829 2.51 1.89

070320

Garlic, Fresh Or Chilled

1.403 1.791 2.276 2.781 3.226 2.30 1.73

Source: Global Trade Atlas

Brazil’s major trading partners for agriculture, forestry and fisheries (AFF)

products

Chart 1: Brazil’s agriculture main import suppliers (2011-2015)

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Argentina30%

United States13%

Uruguay8%

Paraguay7%

China5%

Other37%

Brazil's main agriculture import suppliers

Source: Global Trade Atlas, 2016

Chart 1 above depicts the average shares of Brazil’s main suppliers of

agriculture products between 2011 and 2015. Brazil absorbed on average

63% of their total agriculture imports from 5 countries, Argentina (30%),

United States (13%), Uruguay (8%), Paraguay (7%) and China (5%).

Chart 2: Brazil’s agriculture major export destinations (2011-2015)

China22%

Netherlands6%

United States5%

Russia4%Japan

4%

Other59%

Brazil's major agriculture export destinations

Source: Global Trade Atlas, 2016

Chart 2 above depicts the average shares of Brazil’s main export markets of

agriculture products between 2011 and 2015. China (22%), Netherlands (6%),

United States (5%), Russia (4%) and Japan (4%) were the top 5 Brazil’s export

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markets between 2011 and 2015. These markets absorbed a total average

share of 41% of Brazil’s exports of agricultural products between 2011 and

2015.

Chart 3: Brazil’s main forestry import suppliers (2011-2015)

United States18%

China14%

Germany10%Argentina

9%Canada

8%

Other41%

Brazil's main forestry import suppliers

Source: Global Trade Atlas, 2016

Chart 3 above illustrates that on average between 2011 and 2015, Brazil’s

forestry imports from the world was dominated by 5 countries supplying 59% of

all Brazil’s forestry imports. The main suppliers of Brazil’s forestry imports are

United States (18%), China (14%), Germany (10%), Argentina (9%) and

Canada (8%).

Chart 4: Brazil forestry major export destinations (2011-2015)

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United States21%

China19%

Netherlands11%

Italy7%

Argentina5%

Other37%

Brazil's major forestry export destinations

Source: Global Trade Atlas, 2016

Chart 4 above shows Brazil’s major export destinations of its forestry products.

On average between 2011 and 2015, the United States absorbed the largest

share of Brazil’s forestry exports to the world at 21%. China (19%),

Netherlands (11%), Italy (7%), and Argentina (5%) absorbed on average 42%

of forestry products from Brazil in the same period.

Chart 5: Brazil fisheries main import suppliers (2011-2015)

Chile34%

China17%

Norway12%

Argentina9%

Portugal7%

Other21%

Brazil's main fisheries import suppliers

Source: Global Trade Atlas, 2016

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Chart 5 above shows Brazil’s main suppliers of fisheries products between

2011 and 2015. On average, more than half (i.e. 79%) of Brazil’s fisheries

supply is dominated by Chile (34%), China (17%), Norway (12%), Argentina

(9%) and Portugal (7%).

Chart 6: Brazil fisheries major export destinations (2011-2015)

United States37%

Hong Kong7%Spain

7%Belgium

6%

Japan5%

Other38%

Brazil's main fisheries export destinations

Source: Global Trade Atlas, 2016

Chart 6 above shows Brazil’s major fisheries export markets between 2011

and 2015. On average, the United States (37%) is the biggest importer of

Brazil’s fisheries products followed by Hong Kong (7%), Belgium (6%) and

Japan (5%).

9. South Africa – Brazil trading relationship in agriculture, forestry

and fisheries products

Major imports and exports

Table 11 below shows SA’s average top ten AFF import products from Brazil

between 2010 and 2015 in terms of value and share. The main AFF import

products were chicken cuts (R1.246 billion) and cane/beet sugar (R0.845

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billion) with a combined average share of 46% of the total SA imports of AFF

products from Brazil between 2010 and 2015.

Table 11: South Africa’s top 10 AFF imports from Brazil (2010-2015) in Billions of

Rands

2010 2011 2012 2013 2014 2015 Ave

Ave%

Share

HS Code

AFF 3.051 4.619 4.951 5.385 3.520 5.738 4.544

020714 Chicken Cuts 1.103 1.397 1.239 1.243 1.037 1.456 1.246 27

170199 Cane/Beet Sugar 0.356 0.705 1.081 1.584 0.526 0.818 0.845 19

100590 Corn (Maize) 0.036 0.094 0.001 0.005 - 0.738. 0.146 3

240120 Tobacco 0.322 0.234 0. 246 0.171 0.366 0.411 0.292 6

120190 Soybeans - - - - 0.082 0.401 0.080 2

020727 Turkey Cuts 0.164 0.130 0.238. 0.279 0.232 0.214 0.209 5

480255 Paper 0.003 0.006 0.003 0.012 0.007 0.120 0.025 1

170114 Cane Sugar - - 0.143 0.315 0.046 0.118 0.104 2

441239 Plywood 0.037 0.066 0.082 0.079 0.175 0.106 0.091 2

090111 Coffee 0.029 0.047 0.038 0.034 0.060 0.071 0.047 1

Source: Global Trade Atlas

Table 12 below shows SA’s average top ten AFF export products to Brazil

between 2010 and 2015 in terms of value and share. The main AFF exports

products were liqueurs and cordial (R 42.587 million) , dried grapes (R29.294

million) , vegetable seed (R26.717) and grape wines (R26.163) with a

combined average share of 64% of the total SA exports of AFF products to

Brazil between 2010-2015.

Table 12: South Africa’s top 10 AFF exports to Brazil (2010-2015) in Millions

of Rands

2010 2011 2012 2013 2014 2015 Ave

Ave %share

HS Code

AFF 139.7

97 181.1

78 166.6

39 172.9

85 278.7

03 237.5

13 196.1

36

220870 Liqueurs And

Cordials 20.79

3 29.44

9 48.09

1 37.24

8 47.14

2 72.79

8 42.58

7 22

20

080620 Grapes, dried 14.63

4 4.207

29.697

26.191

58.332

42.699

29.294

15

120991 Vegetable

Seeds 9.557

15.233

21.681

30.876

41.890

41.067

26.717

14

220421 Wine, Grape 26.00

6 15.98

3 24.84

7 19.12

5 32.73

1 38.28

5 26.16

3 13

481910 Cartons, Boxes

18.737

25.874

7.503 14.58

4 21.08

1 28.27

7 19.34

3 10

210390 Sauces 0.478 0.768 1.898 2.260 4.167 8.916 3.081 2

080262 Macadamia

Nuts - - - -

10.898

7.000 2.983 2

090411 Pepper Of

Genus Piper 0.031 0.288 - 0.124 2.302 3.773 1.086 1

030381 Dogfish /Sharks

- - 2.687 1.376 2.752 3.522 1.723 1

210610 Protein

Concentrates 0 0 0 0 1.546 3.280

804.446

1

Source: Global Trade Atlas

10. Trade & Tariff Policies14

Measures directly affecting imports into Brazil

Table 15: Brazil’s import procedure system

PRIOR TO SHIPMENT DURING SHIPMENT UPON PRODUCT ARRIVAL

1. Plant Registration 7.Shipping Instructions 9. Notification of Cargo Arrival

2. Ingredients Evaluation 8. Bill of Lading (B/L) or Airway Bill (AWB) 10. Import Declaration (DI)

3. Labelling 11. Inspection MAPA/ANVISA

4. Product Registration 12. Customs’ Evaluation

5. Pro Forma Invoice 13. Re-Inspection/Product Release

6. Import License (LI)

Source: www.globaltrade.net

Brazil sets strict control for imports of animal origin products, vegetable origin

products, alcoholic and non-alcoholic beverages and organic products. Brazil

allows imports of food that has ingredients that meet the specification,

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Brazil TPR (201?)

21

tolerance levels and the labelling of food and beverages set by the government

of Brazil. Products exported to Brazil are classified under two categories; they

may be exempted from registration or must be registered. Products of animal

origin, margarine and honey must be registered before importing. A pro forma

invoice is imported for clearance. The clearance process can only start when a

pro forma invoice is sent to the Brazilian importer. Import permit is compulsory

and requested before shipment of products such as food and beverages. All

this procedures are conducted before any shipment.

A shipping instruction that has all the information concerning the shipment

together with the documents for the importer must be provided. A bill of lading

or airway bill will issued. These procedures are to be followed during the

shipment process.

The SISCOMEX15 system sends the cargo to the customs terminal for storage.

Import Declaration is prepared by the importer and all taxes paid. The import

permit (LI) is presented to MAPA16 by the importer. A number of processes by

the customs official are done for the release of the goods to the importer. The

release of the goods is dependent on whether the product classification and

tax payments requirements are met. Finally the MAPA inspector re-inspects

before admitting the goods into Brazil.

Brazil’s import procedures are high considering the procedures, time and cost

it may take to import to Brazil. A lot of documents are required for the import

process to take place. A lot of documents is requested and made by the

relevant agencies. On average 18 different documents are requested. These

procedures are longer if dealing with products such as food of animal origin,

plant origin and beverages because they must be registered prior importing.

15

Integrated Foreign Trade System 16

Brazillian Ministry of Agriculture, Livestock and Food supply

22

Such products are at risk of arriving at their destination in a different condition

it was when the goods arrived at the port of entry. This affects imports to

Brazil.

11. Agricultural Markets Accessibility17

Brazil applies 10.2% average tariff on agricultural products and 14.1% for non-

agricultural products, which was higher than the average MFN applied tariff for

agricultural products and non-agricultural products in 2014. Brazil applies

10.2%, 17, 0% average MFN tariff on Fruits & vegetables & plants and

Beverages & tobacco respectively.

12. Trade potential analysis

Table 16 below shows the 5 top products with the highest potential and scoring

a TPI score of 5. The agricultural products that have potential are Seeds;

vegetables for sowing; Sauces; preparations and mixed condiments, and

mixed seasonings; vegetable extracts; Plants &parts of plants (incl seed &

fruit) used in pharmaceuticals, perfumes and insecticides; and Food

preparations. There are no forestry and fishery products with potential.

Table 16: South Africa's AFF products with potential for export to Brazil according

to the TPI

HS Code Products Existenc

e of trade

Growth in

Brazil's imports from SA

2010-2015

Brazil's growth

in imports

from world 2010-2015

SA's exports growth

to World

Indicative

potential Trade > 1 million

Total TPI

120991 Seeds, vegetable, for

sowing 1 1 1 1 1 5

210390 Sauces and

preparations and mixed 1 1 1 1 1 5

17

World Tariffs profiles 2015

23

condiments and mixed seasonings

130219 Vegetable saps and

extracts 1 1 1 1 1 5

121190

Plants &parts of plants(incl seed&fruit)

used in pharmaceuticals,perfu

mes,insecticides

1 1 1 1 1 5

210690 Food preparations 1 1 1 1 1 5

Source: World Trade Map

13. Conclusion

Brazil is one of the world main producers of agricultural products and rich in

natural resources. Brazil’s exports of agricultural products are high. Brazil is a

source of food such as Broiler meat for direct consumption in SA. The study

indicates that Brazil is self sufficient in producing agricultural products.

Based on the TPI there are opportunities for SA to can export to Brazil. The

products with potential according to the TPI are Seeds; vegetables for sowing;

Sauces; preparations and mixed condiments, and mixed seasonings;

vegetable extracts; Plants &parts of plants (incl seed & fruit) used in

pharmaceuticals, perfumes and insecticides; and Food preparations.

The study reveals that Brazil’s market is protected by high tariffs and non-tariff

barriers to be considered to gain access to the Brazil market. The non tariff

barriers such as valuation of products at customs, registration procedures and

rules of origin. The study also shows that the products that SA has potential to

export to Brazil have registration requirements before exporting.

24

Annexure 1 - Trade Potential Index methodology

The Trade Potential Index uses a scoring system based on data obtained from the

Trade Map database. This allows the analysis to focus on trade potential whilst

taking cognizance of import demand, import trends, growth rates and unit values

rather than focusing solely on trade potential values. A score of either 1 or 0 is

assigned to the selected trade indicators contained in the database. This score is

then aggregated to give a total score, which is measured against a final score of 5.

A score of 1 would therefore represent the lowest end of the scale and the least

trade potential whilst a score of 5 would indicate the greatest trade potential.

The basic criterion for scoring is as follows:

• Existence of current trade: If current trade in the form of imports from or exports to

the partner country does exist, a score of 1 is allocated. The absence of trade is

allocated a score of 0. The existence of a trade relationship is deemed a significant

factor in furthering trade.

• Growth in import demand from a partner country: If imports from the partner

country have registered positive growth measured over the latest five year period, a

score of 1 is allocated. No growth or negative growth rates are awarded a score of

0.

• Growth in import demand from the world: Import growth from the world is used as

an indication of general import demand with positive growth allocated a score of 1

and no or negative growth a score of 0. The inclusion of this value in the table is

also intended to indicate general import demand for the product as well as providing

a basis for comparing demand for specific country products relative to demand for

the same product from global sources.

• Export growth to the World: Exports growth from the exporting country to the rest

of the world is indicative of exporting country’s supply capacity and increased

25

demand for its locally produced goods. A positive growth rate in the value of net

exports over a five year period is awarded a score of 1, whilst no or negative growth

is awarded a score of 0.

More indicators such as the one below and others may be included in the TPI

analysis above.

Market access – Tariff level: If exports from the exporting partner country enter

the importing partner at a zero rate of duty, a score of 1 is allocated; otherwise a

score of 0 is awarded.

Annexure II

Table 17 South Africa's AFF products with potential for export to Brazil according to the TPI

HS Code Products

Exist

ence

of

trade

Grow

th in

Brazil

's

impo

rts

from

SA

2010-

2015

Brazil's

growth

in

import

s from

world

2010-

2015

SA's

expor

ts

growt

h to

Worl

d

Indic

ative

poten

tial

Trade

> 1

millio

n

T

o

t

a

l

T

P

I

120991 Seeds, vegetable, nes for sowing 1 1 1 1 1 5

210390

Sauces and preparations nes and mixed

condiments and mixed seasonings 1 1 1 1 1 5

130219 Vegetable saps and extracts nes 1 1 1 1 1 5

121190

Plants &pts of plants(incl sed&fruit) usd in

pharm,perf,insect etc nes 1 1 1 1 1 5

210690 Food preparations nes 1 1 1 1 1 5

220870 Liqueurs and cordials 1 1 1 0 1 4

080620 Grapes, dried 1 1 0 1 1 4

090411

Pepper of the genus Piper,ex cubeb

pepper,neither crushd nor ground 1 1 1 1 0 4

26

220410 Grape wines, sparkling 1 1 1 0 1 4

091099 Spices nes 1 0 1 1 1 4

090412

Pepper of the genus Piper, except cubeb

pepper, crushed or ground 1 0 1 1 1 4

210410

Soups and broths and preparations

thereof 1 1 1 0 1 4

220290

Non-alcoholic beverages nes,excludg

fruit/veg juices of headg No 20.09 1 1 0 1 1 4

151590

Veg fats&oils nes&their fractions,refind or

not but not chemically mod 1 0 1 1 1 4

180690

Chocolate and other food preparations

containing cocoa nes 1 1 1 0 1 4

090220

Green tea (not fermented) in packages

exceeding 3 kg 1 0 1 1 1 4

150910 Olive oil, virgin 1 0 1 1 1 4

200870

Peaches nes,o/w prep o presvd whether

o not sugard,sweetend o spiritd 1 0 1 1 1 4

220890

Undenatrd ethyl alc <80% alc cont by

vol&spirit,liqueur&spirit bev nes 1 0 1 1 1 4

491110

Trade advertising material, commercial

catalogue and the like 1 0 1 1 1 4

220421

Grape wines nes,incl fort&grape

must,unfermntd by add alc in ctnr<=2l 1 0 1 0 1 3

481910

Cartons, boxes and cases, of corrugated

paper or paperboard 1 0 1 0 1 3

051000

Ambergris,castoreum,etc,bile

drid/not&animal gland&prod for pharm

prep 1 0 1 1 0 3

210610

Protein concentrates and textured protein

substances 1 0 1 0 1 3

051199

Animal prods nes&dead animals of

Chapter I unfit for human consumption 1 0 0 1 1 3

200990

Mixtures of juices unfermentd&not spiritd

whether o not sugard o sweet 1 0 0 1 1 3

220510

Vermouth&oth grape wines flav w plants

o arom subst in ctnr <= 2 l 1 0 1 1 0 3

060290 Plants live, nes 1 0 1 0 1 3

470200 Chemical wood pulp, dissolving grades 1 0 0 1 1 3

071290

Vegetables and mixtures dried, but not

further prepared nes 1 0 1 0 1 3

200961 Grape juice, incl. grape must, 1 0 1 1 0 3

27

unfermented, Brix value <= 30 at 20°C,

210120

Tea or maté extracts,essences &

concentrates & preparations thereof 1 0 1 0 1 3

120750 Mustard seeds, whether or not broken 1 0 1 1 0 3

200971

Apple juice, unfermented, Brix value <=

20 at 20°C, whether or not con 1 0 1 1 0 3

442010 Statuettes and other ornaments of wood 1 0 1 0 1 3

091030 Turmeric (curcuma) 1 0 1 1 0 3

121299

Vegetable products nes used primarily for

human consumption 1 0 1 1 0 3

200919

Orange juice&nes,unfermentd not

spiritd,whether or not sugard or sweet 1 0 1 1 0 3

482390 Paper and paper articles, nes 1 0 1 0 1 3

490199

Books, brochures, leaflets and similar

printed matter, nes 1 0 1 0 1 3

010619

Live mammals (excl. primates, whales,

dolphins and purpoises "mammals 1 0 1 1 0 3

020120 Bovine cuts bone in, fresh or chilled 0 0 1 1 1 3

020130 Bovine cuts boneless, fresh or chilled 0 0 1 1 1 3

020230 Bovine cuts boneless, frozen 0 0 1 1 1 3

020442 Sheep cuts, bone in, frozen 0 0 1 1 1 3

040221

Milk and cream powder unsweetened

exceeding 1.5% fat 0 0 1 1 1 3

040490

Products consisting of natural milk

constituents sweetened or not nes 0 0 1 1 1 3

070951 Mushrooms, fresh or chilled 0 0 1 1 1 3

080510 Oranges, fresh or dried 0 0 1 1 1 3

080520

Mandarins(tang&sats)clementines&wilkg

s &sim citrus hybrids,fresh/drid 0 0 1 1 1 3

080550

Fresh or dried lemons "Citrus limon,

Citrus limonum" and limes "Citrus 0 0 1 1 1 3

080610 Grapes, fresh 0 0 1 1 1 3

080810 Apples, fresh 0 0 1 1 1 3

080940 Plums and sloes, fresh 0 0 1 1 1 3

081040

Cranberries, bilberries and other fruits of

the genus Vaccinium, fresh 0 0 1 1 1 3

081090 Fruits, fresh nes 0 0 1 1 1 3

081190

Fruits&edible nuts uncook,steam/boil

(water) sweetend/not,frozen,nes 0 0 1 1 1 3

081340 Fruits, dried nes 0 0 1 1 1 3

28

090230

Black tea (fermented) & partly fermentd

tea in packages not exceedg 3 kg 1 0 1 1 0 3

110419 Cereals, rolled or flaked grains nes 0 0 1 1 1 3

110520 Potato flakes 0 0 1 1 1 3

120999 Seeds, fruit and spores for sowing, nes 0 0 1 1 1 3

130190

Natural gums, resins, gum-resins and

balsam, except arabic gum 1 0 1 0 1 3

150420

Fish fats&oils&their fractions exc

liver,refind/not,not chemically mod 0 0 1 1 1 3

150710

Soya-bean oil crude, whether or not

degummed 0 0 1 1 1 3

151190

Palm oil and its fractions refined but not

chemically modified 0 0 1 1 1 3

151620

Veg fats &oils&fractions

hydrogenatd,inter/re-esterifid,etc,ref'd/not 0 0 1 1 1 3

170211

Lactose and lactose syrup, >99% lactose

on dry matter 1 0 1 0 1 3

170290 Sugar nes, including invert sugar 1 0 1 0 1 3

170490

Sugar confectionery nes (includg white

chocolate),not containg cocoa 1 0 1 0 1 3

180620

Chocolate&other food preparations

containg cocoa weighg more than 2 kg 0 0 1 1 1 3

180632

Choc&food prep cntg cocoa in

blocks,slabs/bars,not filld,not over 2 kg 0 0 1 1 1 3

190110

Prep of cereals,flour,starch/milk f infant

use,put up f retail sale 0 0 1 1 1 3

190120

Mixes & doughs for the prep of bakers'

wares of heading No 19.05, nes 0 0 1 1 1 3

190190

Malt extract&food prep of Ch 19 <50%

cocoa&hd 0401 to 0404 < 10% cocoa 0 0 1 1 1 3

190219

Uncooked pasta, not stuffed or otherwise

prepared, nes 0 0 1 1 1 3

190230 Pasta nes 0 0 1 1 1 3

190490

Cereals,exc maize (corn),in grain

form,pre-cookd or otherwise prepard 0 0 1 1 1 3

200410

Potatoes prepard or preservd oth than by

vinegar or acetic acid,frozen 0 0 1 1 1 3

200599

Vegetables and mixtures of vegetables,

prepared or preserved otherwise 0 0 1 1 1 3

200799

Jams,fruit jellies,fruit/nut

purée&paste,ckd 1 0 0 1 1 3

29

prep,sugard,sweetend/not

200912

Orange juice, unfermented, Brix value <=

20 at 20°C, whether or not co 1 0 0 1 1 3

210210 Yeasts, active 1 0 1 0 1 3

210330

Mustard flour and meal and prepared

mustard 0 0 1 1 1 3

220300 Beer made from malt 0 0 1 1 1 3

220429

Grape wines nes,incl fort&grape

must,unfermntd by add alc,in ctnr > 2l 1 0 1 1 0 3

220830 Whiskies 0 0 1 1 1 3

220860 Vodka 0 0 1 1 1 3

230990 Animal feed preparations nes 0 0 1 1 1 3

440890

Veneer, non-coniferous nes, less than 6

mm thick 1 0 1 0 1 3

441890

Builder's joinery and carpentery of wood

nes 0 0 1 1 1 3

441900 Tableware and kitchenware, of wood 0 0 1 1 1 3

442190 Wood articles nes 0 0 1 1 1 3

480810 Paper, corrugated, in rolls or sheets 0 0 1 1 1 3

481029

Paper, fine, woodcontaining, in rolls or

sheets, clay coated, nes 0 0 1 1 1 3

481159

Paper and paperboard, surface-coloured,

surface-decorated or printed, 0 0 1 1 1 3

481890

Household or hospital supplies, of paper,

nes 0 0 1 1 1 3

482020 Exercise books of paper 0 0 1 1 1 3