STATE TRADING

REPLIES TO QUESTIONS POSED BY Australia[1]
REGARDING THE NOTIFICATION OF BRAZIL[2]

The following communication, dated and received on 5 February 2025, is being circulated at the request of the delegation of Brazil.

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Question 1

Could Brazil provide information on what circumstances trigger minimum price intervention by Conab?

Reply:

Conab's intervention is triggered when market prices are below the established reference price.

Question 2

Could Brazil also provide information on what actions Conab takes to support minimum prices?

Reply:

Conab carries out interventions with the objective of supporting the commercialization of production through mechanisms such as:

·_        Federal Government Acquisition (AGF): Consists of the direct purchase of part of the production of rural producers.

·_        Sale Option Agreement (COV): Offers the rural producer and/or his cooperative the right, but not the obligation, to sell the product to the government at a future date, at a previously fixed price. This instrument can only be exercised if market prices do not recover.

·_        Product Flow Award (PEP) and the Equalization Award Paid to the Rural Producer (PEPRO): Instruments whose objective is to enable the outflow of commodities from producing regions towards undersupplied consumer regions, eliminating the need for government acquisition and the accumulation of stocks.

·_        Direct subsidies (exclusively for extractive producers): This mechanism ensures compensation between the production cost and the market price when the latter is below the reference price. In this case, the resources are transferred directly to the extractivists.

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