Grain traders challenge new export tax in Brazil court

Adds information on Para's new grain tax in paragraph 9-12

By Ana Mano

SAO PAULO, Feb 21 (Reuters) - Brazilian grain traders' association Abiove is challenging a new state law imposing a 1.8% levy on grain exports from Maranhao that will take effect next week, Abiove head Andre Nassar told Reuters in an interview.

Maranhao state had no immediate comment. The port of Itaqui in Maranhao is one of northern Brazil's most important grain export hubs.

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

Critics have said 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.

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, Nassar said 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.