Minas Gerais Agency | Government of Minas suspends benefits for importers to balance the market and ensure competitiveness for milk producers in the state

In response to the unfair competition faced by milk producers in Minas Gerais in the face of growing imports from Mercosur countries, the State Government, through the State Finance Secretariat (SEF), published this Thursday’s edition of the Official Gazette (28/ 4) Decree No. 48,791, which establishes that all imports of powdered milk will be taxed in Minas Gerais, with the benefit granted to taxpayers holding the Special Regime being suspended. In practice, this means, when importing powdered milk, the rate increases from 0% to 12%. For the sale of this fractionated powdered milk, the rate increases from 2% to 18%.

The decree is valid for 90 days. The measure had already been anticipated by governor Romeu Zema at “Minas Grita pelo Leite”, a meeting that brought together around 7 thousand producers at Expominas, in Belo Horizonte, with the aim of giving visibility to the crisis that the sector has been facing due to imports.

Brazil is one of the world’s largest milk producers – and Minas leads the ranking, with 9.5 billion liters (27% of national production). Despite this, in 2023, powdered milk was the main dairy product imported by the country, reaching a volume equivalent to 2.8 billion liters of milk. This volume is almost 96% higher than that purchased in 2019, representing an import record in 23 years.

According to the Ministry of Agriculture and Livestock (Mapa), 46% of imports came from Argentina and 45% from Uruguay. As members of Mercosur, both countries are exempt from the Common External Tariff (TEC) charged to countries outside the bloc, disrupting the milk production chain.

Last year, Minas Gerais imports of powdered milk totaled US$62.6 million. And this year, purchases continue to grow. In the first two months of this year, imports have already reached US$12.7 million, representing 20.3% of the 2023 value.

In Minas, specifically, several producers are forced to leave the dairy industry due to unfair market competition caused by the import of the product, which contributes significantly to the drop in the price of milk paid to the producer, a situation that is even worse for small and micro rural producers.

In January 2024, the amount paid to the producer was R$2.11 per liter, lower than the same month in 2023, when it was R$2.51. The numbers highlight the negative impact of imports on prices paid to Minas Gerais producers. In 2022, the average price of a liter of milk was R$2.71.

The Secretary of Agriculture, Livestock and Supply (Seapa), Thales Fernandes, reinforces the importance of the measure.

“This import was disrupting the production of the largest dairy basin in the country. Producers are giving up the activity, which is one of the most traditional in our agricultural sector and an important source of employment and income, especially in family farming. With this measure, the Government of Minas Gerais shows that it is attentive to the difficulties and desires of the productive class and continues to work hard to strengthen the sector”.