Santa Catarina Dairy Sector Loses R$300 Million Due to Tax Policies

Santa Catarina's dairy industry is currently losing approximately R$300 million annually due to the state's tax policies. According to Giesel, president of Conseleite-SC, these policies have placed the state at a disadvantage compared to its neighbors, Rio Grande do Sul and Paraná, since 2012. Giesel argues that the industry requires a permanent legal solution rather than temporary measures to address this issue.

Efforts to address these tax inequalities have been made over several state administrations without achieving a permanent resolution. Programs like Pronampe Leite, which offers subsidized credit, have provided temporary relief but do not substitute for a comprehensive structural policy aimed at enhancing competitiveness.

Internal tax inequality is compounded by international challenges. Giesel points out that Brazilian production costs are higher than those in Argentina and Uruguay, where larger properties, cheaper animal feed, and lower taxes on equipment contribute to reduced costs. Transportation costs in Brazil are also higher, with freight costs ranging from R$0.13 to R$0.14 per liter, compared to R$0.08 in Argentina.

The disparity in costs affects the price of imported milk, as studies indicate that Argentine and Uruguayan products are sold in Brazil at prices lower than those in their home markets. Giesel suggests that this creates an artificial competition that harms Brazilian producers.

In addition to tax and competition issues, the industry faces environmental challenges. Following years of drought, there is now concern about excessive rainfall due to El Niño, which could adversely affect pasture development and increase the need for purchased feed, driving up production costs.

Furthermore, Giesel highlights the need to improve energy supply quality and rural road conditions to reduce transportation costs. Stable energy supply and better infrastructure are crucial for the industry's efficiency and cost management.