Company to acquire 979 railcars and 23 locomotives to move grains and sugar
01/27/2025
Cofco International, the Chinese agribusiness giant and one of the world’s largest agricultural trading companies, will invest R$1.2 billion in the acquisition of 979 railcars and 23 locomotives to enhance its logistics operations in Brazil. The new fleet will transport grains and sugar to the Cofco Export Terminal (TEC) at STS-11 in the Port of Santos (São Paulo), via Rumo’s railway network.
“This project aims to improve the efficiency of rail transport for grains and sugar, reducing dependence on road transportation and the associated carbon emissions. The partnership marks a significant milestone for national logistics, with the potential to substantially decrease the number of trucks on the roads, easing traffic congestion and reducing environmental impact,” said Fabrício Degani, logistics director for Cofco International’s grains and oilseeds division in Brazil.
Mr. Degani estimates the new railcars and locomotives will have the capacity to transport 4 million tonnes of grains and meal annually from the Central-West region—where Cofco operates storage facilities and crushing plants—and sugar from São Paulo’s interior, home to four Cofco-owned sugar mills, to the Port of Santos.
Transporting this volume by road would require nearly 100,000 truck trips annually. “We are focusing on more sustainable solutions to drive logistical expansion,” Mr. Degani stated. Cofco estimates that rail operations will reduce greenhouse gas emissions by 80% compared to truck transportation.
This investment adds to the company’s efforts to expand the STS-11 agricultural terminal. In 2022, Cofco secured the lease for the terminal in a public auction, committing $285 million to increase export capacity from 4.5 million tonnes to 14.5 million tonnes per year by 2026.
Deliveries of the railcars and locomotives will begin in March, with full operation of the fleet expected by the first quarter of 2026. The locomotives will be manufactured by Wabtec at its Contagem (Minas Gerais) plant, while the railcars will be produced by Greenbrier Maxion in Hortolândia (São Paulo).
The operation of Cofco’s new fleet will be managed by Rumo, which already operates a fleet of 33,000 railcars and nearly 1,000 locomotives. “This addition of capacity from Cofco aligns perfectly with Rumo’s expansion plans,” said Eudis Furtado, Rumo’s vice president of commercial operations. He highlighted Rumo’s ongoing projects, including the construction of 700 kilometers of railway in Mato Grosso, connecting the Midwest region and São Paulo to the Port of Santos. “Through this contract with Cofco, we will expand our footprint in the Port of Santos, optimize national logistics, and help reduce Brazil’s infrastructure bottlenecks,” Mr. Furtado added.
Currently, Cofco unloads over 110,000 trucks and more than 85,000 railcars annually at the Port of Santos. The company expects to handle 8 million tonnes of grains, sugar, and soybean meal at the terminal in 2025. By 2026, with the completion of the STS-11 upgrades and third-party service offerings, the terminal’s throughput is projected to reach 14.5 million tonnes, handling grains and soybean meal from the Midwest and sugar from São Paulo’s interior.
Cofco plans to export 70% to 80% of its Brazil-originated products through Santos, with the remaining volume shipped via the Northern Arc ports, in partnership with Hidrovias do Brasil. Mr. Degani noted that Cofco has plans to expand in the Northern Arc but declined to provide further details at this time.
In 2023, Cofco moved approximately 15 million tonnes of agricultural products in Brazil, a volume expected to grow with the Santos terminal in full operation. The company anticipates creating 480 direct jobs through the terminal’s construction.
Meanwhile, Rumo is also investing heavily to expand capacity via the Port of Santos, including the North-South Railway, Mato Grosso Railway, Paulista Network upgrades, and the Santos terminal. According to Mr. Furtado, Rumo has 5,000 workers engaged in the Mato Grosso railway expansion project, with investments ranging between R$3.8 billion and R$4.5 billion for its first phase, set to begin operations in 2027. Rumo operates nearly 13,000 kilometers of railway across Brazil, transporting over 20 million tonnes of soybeans, corn, and meal annually to the Port of Santos.
Impact of minimum wage also appears in the broad increase of prices linked to freelancers
01/27/2025
While the government grapples with how to control food prices, economists are increasingly concerned about the rising inflation in services and other “qualitative” measures. These indicators show trends over which the Central Bank’s monetary policy may have more influence.
The January mid-month inflation index IPCA-15 — known as a reliable predictor for official inflation — rose by 0.11%, surpassing the median expectation of a 0.02% decrease gathered by Valor Data.
One unexpected positive factor in the month was food prices. The “food and beverages” category slowed more than economists anticipated, rising 1.06% in the January IPCA-15 compared to 1.47% in the December 2024 preview. Specifically, food consumed at home decelerated to 1.1% from 1.56%.
A significant portion of this deceleration is attributed to meat prices, a topic of concern for President Lula, which increased by only 1.93% in January compared to 7.91% in the prior month’s IPCA-15. Over 12 months, however, meat prices remain heavily pressured with a 20.65% inflation rate, though they have stabilized relative to the full December 2024 Extended Consumer Price Index (IPCA).
Food consumed at home saw a one percentage point relief from the previous month, reaching 7.75% over the 12 months leading up to the January preview, while the “food and beverages” group decelerated to 7.49% from 8%. Nonetheless, these figures remain above the general index, which has increased by 4.5% and is now temporarily within the upper tolerance limit of the year’s inflation target—down from 4.71% in the December preview.
Without the “Itaipu bonus” that caused a 15.5% drop in residential electricity prices in January’s IPCA-15, the inflation preview would have been closer to 0.7%, and over 12 months, around 5%, noted Mirella Hirakawa of the consultancy Buysidebrazil. This figure would more closely resemble 2021, when inflation closed the year at 10% following the pandemic shock.
This temporary effect on energy concealed clear signs of inflation acceleration in January’s preview. More importantly, from the perspective of analysts and the Central Bank, all qualitative measures accelerated between December 2024’s IPCA-15 and January 2025’s.
Services accelerated to 0.85% from 0.64%, significantly above the market’s expectation of around 0.36%. This was a reacceleration, as they had decreased from a 0.72% rise in November. An important factor was airfare prices, which rose by more than 10% in the January preview, contrary to economists’ expectations of a decrease.
Nonetheless, core services, excluding volatile items such as airfare, accelerated to 0.96% from 0.71%. This is the highest level since May 2022 (0.98%), according to the MCM series. Over 12 months, core services increased to 5.95% from 5.66%, the highest value since June 2023, 6.53%.
A significant portion of this “qualitative” inflation has been fueled by an overheated domestic economy and the support of household disposable income, driven by factors like a tight labor market and a 7.5% increase in the minimum wage.
The impact of the minimum wage also seems evident in the widespread price increases of services linked to “freelancers,” such as dentists (1.6%), psychologists (1.2%), seamstresses (1.2%), and manicurists (2.3%).
Tatiana Pinheiro, chief economist at Galapagos Capital, believes that if monetary policy is effective, it will help control part of the exchange rate pass-through from wholesale to consumer prices and keep the 2025 IPCA at a level similar to the end of 2024. This would be a significant achievement, as the shift from an exchange rate of R$5 per dollar to R$6 is no trivial matter.
However, for this to happen, fiscal policy—which is under the government’s control—needs to cooperate. Without new actions in this area on the horizon, the perception is that, at least in terms of inflation, 2025 is starting much like 2024 ended: with concerning and worsening signals.
U.S. President opposes key government priorities like social media regulation and taxing the ultra-wealthy
01/27/2025
Donald Trump’s first week back in the White House has already signaled challenges ahead for the Planalto Palace in advancing several priorities of President Lula’s foreign policy agenda.
Key initiatives such as the Global Alliance Against Hunger, a proposal to tax the ultra-wealthy, a climate financing deal at COP30, the push for de-dollarizing international trade, and social media regulation to combat fake news face weakened prospects—or outright threats—under the Republican leader’s administration. On the other hand, Brazil may attract more investments in renewable energy, given Mr. Trump’s preference for fossil fuels.
Mr. Trump’s nationalist and protectionist stance and his alignment with far-right movements and big tech companies are expected to clash with Brazil’s goals on multiple fronts.
Social media regulation and the fight against fake news are central to Lula’s administration. Mr. Trump, however, has openly opposed any measures he perceives as “threats to free speech.”
Having appointed Elon Musk, the owner of platform X, to a government position, Mr. Trump has also enjoyed the backing of Mark Zuckerberg. In January, Mr. Zuckerberg announced the end of Meta’s content moderation policies for Facebook, Instagram, and WhatsApp. When contacted, the companies did not respond. Experts argue for holding platforms accountable for their content.
There is a perception that forcefully pursuing this agenda could draw negative attention from Mr. Trump and Mr. Musk, a scenario the Lula administration seeks to avoid. As a workaround, the government plans to support regulatory bills proposed by opposition lawmakers in Congress, such as Senator Damares Alves and Congressman Silas Câmara, to increase oversight of social media.
Members of Lula’s government see the Trump-Musk alliance as a global democratic risk. Mr. Musk has publicly supported the far-right Alternative for Germany (AfD) party in upcoming elections and was photographed with Nigel Farage, leader of Reform UK, in front of a Trump portrait at Mar-a-Lago before the inauguration.
Concerns also extend to Mr. Trump and big tech’s potential influence on Brazil’s 2026 elections. In November, First Lady Rosângela da Silva criticized Mr. Musk at a G20 pre-event in Rio de Janeiro, linking him to misinformation on social media. Her remarks quickly spread across social media. Mr. Musk responded to the video with laughing emojis on X, commenting, “They will lose the next election.”
Finance Minister Fernando Haddad’s proposal to tax the ultra-wealthy as a means to fund global inequality projects faces “zero chance” of advancing under Trump, according to a senior government source.
During his first term, Mr. Trump cut taxes for the wealthy and large corporations, arguing it spurred economic growth. His latest campaign included further tax reductions including exemptions and eliminating caps on state and local tax deductions, benefiting the wealthiest.
Brazil’s push to de-dollarize trade within BRICS has also drawn Mr. Trump’s ire. He staunchly defends the U.S. dollar’s role as the global reserve currency and opposes diversifying currencies in international transactions.
In November, Mr. Trump threatened up to 100% tariffs on BRICS products if the group pursued a common currency.
“The U.S. demands a commitment from these countries not to create a BRICS currency or support any alternatives to the mighty U.S. dollar,” Mr. Trump declared on social media.
The Global Alliance Against Hunger, a Lula-led initiative launched at the G20 to combat food insecurity in the poorest nations, could also falter.
While former President Joe Biden supported the effort, Mr. Trump’s preference for disengaging from multilateral agreements casts doubt on U.S. participation.
Similar concerns surround COP30, the global climate conference scheduled for Belém. On his first day back in office, President Trump announced the U.S. withdrawal from the Paris Agreement, echoing his first-term decision.
Brazilian officials fear this could dissuade other nations from participating in global climate initiatives and weaken negotiations at the conference.
Ambassador André Corrêa do Lago expressed concern last Tuesday (21) after being named COP30 president.
“We are still assessing President Trump’s decisions, but there is no doubt they will significantly impact our preparations and how we navigate the withdrawal of such a key player from this process,” he told reporters at the Planalto Palace.
Despite these challenges, Mr. Trump’s focus on fossil fuels could indirectly benefit Brazil. Sectors of the Brazilian economy see an opportunity to attract green investments, particularly in renewable energy, that might otherwise target the U.S.
Given these dynamics, sources in Brasília admit that the Lula administration will face difficulties in maintaining its international agenda amid tensions with Washington. A Planalto official remarked that Brazil has moved “from a government ally to the opposition” in the global context under Trump.
To mitigate the fallout, Brasília plans to adopt calibrated diplomatic strategies, preserve its leadership in social, environmental, and economic causes, and seek alliances with Europe, Africa, and Asia. These regions share values and priorities aligned with Brazil’s goals. The U.S. Embassy in Brasília did not respond to requests for comment.
Survey shows taxpayers in Brazil won 58% of court rulings involving the new Subsidy Law in 2024
01/27/2025
Brazilian courts have shown greater support for taxpayers in disputes over the taxation of ICMS (Tax on the Circulation of Goods and Services) fiscal incentives. A survey conducted by the law firm Mattos Filho found that, between January and October 2024, companies prevailed in 58% of the 614 first- and second-instance rulings related to the new Subsidy Law (No. 14,789/2023).
The legislation, which came into effect in 2024, changed the rules to impose corporate income tax (IRPJ), social contribution on net profits (CSLL), and social taxes PIS/COFINS on all types of fiscal incentives granted by states and Brasília (Federal District).
The issue is significant for the federal government. However, with the judiciary’s rulings—most of which involve ICMS presumed credits—the revenue collection has reportedly fallen short of expectations. Initially, when the government proposed provisional presidential decree (MP) No. 1,185/2023, the predecessor to the Subsidy Law, it projected a R$35.4 billion increase in annual revenue. This estimate was later reduced to R$26.3 billion when the law was submitted to Congress.
In response to a Freedom of Information Act request, Brazil’s Federal Revenue Service told Valor that it cannot determine the exact amount collected from ICMS subsidy taxation. However, it cited a technical note from the Center for Tax and Customs Studies (CETAD) estimating that the federal government loses approximately R$80 billion annually due to allegedly improper exclusions of state and Federal District incentives from federal tax bases.
According to the note, these exclusions increased by more than 40% after 2017, following the enactment of Complementary Law No. 160 and a ruling by the Superior Court of Justice (STJ). In that decision, the court allowed presumed credits to be excluded from IRPJ and CSLL bases (EREsp 1517492).
The technical note also states that approximately R$2 trillion in state-level incentives were granted to companies between 2020 and 2022. Alongside the financial impact, the Federal Revenue Service highlighted a rise in legal disputes: nearly half of the injunctions filed against it in June 2023 addressed this issue.
Court rulings
In the judiciary, the trend leans in favor of taxpayers. When focusing specifically on presumed credit cases, the rulings are even more favorable: out of 596 cases, 371 were decided for the taxpayers (62%). The only Federal Regional Court (TRF) predominantly siding with the government is the 4th Region, which covers southern Brazil. There, only 36 out of 130 first- and second-instance rulings supported the companies’ arguments (28%).
These rulings have benefited at least 260 companies across various sectors, including Apple, Raia Drogasil, Tommy Hilfiger Brasil, Camil, Nestlé, Pepsi, Johnson & Johnson, E-Vino, and Mobly. The survey conducted by Mattos Filho mapped injunctions, judgments, and decisions in six federal judicial regions. Some rulings encompass all fiscal incentives, while others are limited to presumed credits, depending on the taxpayer’s request. In some cases, tax liabilities—IRPJ/CSLL and PIS/COFINS—are addressed separately.
The distinction is significant. Tax attorneys explained the presumed credit argument is stronger than those for other incentives due to STJ precedents. In 2017, the STJ ruled that IRPJ and CSLL could not be levied on presumed credits as doing so would violate the federal pact. In 2023, the STJ examined whether this understanding could be extended to other fiscal benefits, such as base reductions, and concluded it could not.
The court considered accounting effects: presumed credits represent a “positive inflow” for companies, whereas other incentives, such as tax base reductions, reflect “negative benefits.” To exclude the latter from taxation, companies must meet legal requirements outlined in Article 30 of Law No. 12,973/2014 (Topic 1182).
Following this ruling, the new Subsidy Law (No. 14,789) was enacted, repealing Article 30 and equating all incentives as “investment subsidies.” Companies now must register with the Federal Revenue to claim a tax credit of up to 25%.
In response, many companies turned to the judiciary. The diverse rulings suggest that courts may need to establish new legal precedents. “Some issues remain unresolved, and many rulings do not align with the STJ’s understanding. Although it’s a past issue, discussions persist despite the new law,” said Ariane Guimarães, a partner at Mattos Filho. “This year, the STJ may revisit the topic given the speed of rulings.”
Ms. Guimarães said there is resistance among courts to apply the STJ’s decisions. “The TRF-4 believes that the presumed credit ruling does not apply to granted credits, even though they are essentially the same,” she said. For both arguments, Ms. Guimarães added, there are strong points in favor of taxpayers, though the presumed credit argument is stronger.
Ms. Guimarães emphasized that the STJ’s prior ruling deemed presumed credits non-taxable for IRPJ and CSLL purposes. “It would be consistent for the STJ to uphold its jurisprudence. Presumed credits retain the same characteristics, and the new law cannot retroactively create a taxable event inconsistent with the Federal Constitution.”
The Federal Supreme Court (STF) will also rule on the matter in three cases. One broadly addresses excluding PIS/COFINS from the ICMS presumed credit base (Topic 843), while the others challenge the Subsidy Law’s constitutionality (Direct Actions of Unconstitutionality 7751, 7604, and 7622).
Maria Andréia dos Santos, a partner at law firm Machado Associados, said she expected taxpayer arguments to gain more traction in the TRF-2, which covers Rio de Janeiro and Espírito Santo. “Taxpayers have a slight advantage, but it’s not overwhelming,” she said. “We expected better outcomes regarding presumed credits, given the favorable STJ ruling.”
Ms. Santos noted that taxpayer victories have impacted government revenue, which initially projected R$35.4 billion in additional revenue from subsidy taxation—a figure revised downward over time. By November 2024, total IRPJ and CSLL collections amounted to R$10 billion, according to the Federal Revenue Service.
“Several economic sectors have grown, boosting revenue, but many companies turned to the judiciary, and the rulings favor taxpayers,” Ms. Santos said, adding that she hopes the STJ will reaffirm its jurisprudence. “It’s not just an expectation—it’s essential for legal certainty. There can’t be a shift in position without any material change, as legislative amendments alone cannot override” constitutional principles, she noted. “The federal pact remains in force.”
Valor contacted the Office of the Attorney General of the National Treasury (PGFN), but it did not respond before publication.
Brazil ranks seventh in global study on private sector’s struggle to find skilled professionals
01/24/2025
Brazilian companies are among those most vocal globally about struggling to find skilled professionals. This sentiment is echoed by 81% of businesses, placing Brazil seventh among 42 countries and territories participating this year in the Talent Shortage survey, conducted by ManpowerGroup, a workforce solutions organization, and reviewed exclusively by Valor.
Germany (86%), Israel (85%), and Portugal (84%) top the ranking. The global average is 74%.
According to Wilma Dal Col, Chief Human Resources Officer at ManpowerGroup, multiple factors contribute to the high level of complaints from Brazilian companies regarding the workforce. She explains that the job market is undergoing “exponential” technological advancement, which affects the perception of the requirements for tasks and learning.
“The academic world does not keep pace with the job market, which is intensely experiencing digital evolution and transformation,” she said.
Ms. Dal Col identifies talent shortage as one of the biggest challenges faced by employers in Brazil and worldwide. “Rapid digital transformation, demographic changes, globalization, and the increasing complexity of organizational demands make it even more challenging to find the ideal professional for a specific role,” she noted.
For the past three years, Brazil has maintained a steady position in this survey. Ms. Dal Col sees it as a negative sign, indicating that the country fails to provide continuous professional qualification.
“Companies need to be more sensitive and recognize that they have talented internal personnel. Rather than searching the market, they should invest in their employees,” she suggests. “Ready-made individuals aren’t always available, as humans aren’t born ready. Therefore, there’s a need for continuous effort in qualification.”
Additionally, Ms. Dal Col noted that, for the first time in history, four generations can work together within the same institution. This scenario is challenging as it requires understanding the specificities and ambitions of each life stage, she added.
“The younger generation needs to develop more ‘soft skills,’ for example, while the more mature individuals should focus on skills and training to handle technology more proficiently,” she explained. “Young people often switch jobs quickly, seeking a sense of purpose. Perhaps organizations aren’t yet speaking their language to retain and attract talent.”
The sectors most affected by employability issues in Brazil include transportation, logistics, and automotive (91%), finance and real estate (86%), energy and utilities (85%), and information technology (84%).
The transportation and logistics sector tops the Brazilian list driven by the significant increase in e-commerce since the pandemic, which has created a demand for professionals in this field, the specialist noted. There’s a need for professionals across various levels and requirements.
“Everyone from drivers and stock clerks to high-tech app managers is needed. In other words, a huge variety,” she said.
The survey also examined the talent shortage across different Brazilian states. São Paulo’s capital shows the highest rate, with 88% of employers reporting difficulties in finding professionals with the necessary skills. In the São Paulo state, excluding the capital, the rate is 84%. The list continues with Minas Gerais (83%), Paraná (75%), and Rio de Janeiro (74%).
To tackle and possibly resolve this challenge, organizations are rethinking their strategies for attracting, retaining, and developing talent. According to the survey, key initiatives adopted in Brazil include upskilling and reskilling employees (40%); seeking new talent pools (26%); offering location flexibility, such as hybrid or remote work (24%); and flexible working hours (20%). These are followed by salary adjustments for greater competitiveness (19%), paid job ads (17%), outsourcing roles (17%), and adopting Recruitment Process Outsourcing (RPO) (16%).
According to Ms. Dal Col, soft skills, such as adaptability and problem-solving, are increasingly valued by employers. She added that recruiting difficulties directly impact productivity and limit organizations’ innovation and competitiveness in a constantly changing landscape.
Ministers Rui Costa (Chief of Staff), Paulo Teixeira (Agrarian Development), and Carlos Fávaro (Agriculture) met to finalize proposals to be presented to President Lula this Friday
01/24/2025
The Brazilian government’s top officials are working to address President Lula’s demand for urgent measures to curb rising food prices. However, with limited fiscal room for increased public spending and market concerns over potential interventionist actions, finding effective short-term solutions has proven challenging. Within the Planalto Palace, the seat of the federal government, there is greater certainty about what not to do than clarity on actionable steps.
On Thursday (23), rumors that the government’s plan might involve fiscal-impact measures, such as subsidies to boost popularity, created turbulence in financial markets. That same day, ministers Rui Costa (Chief of Staff), Paulo Teixeira (Agrarian Development), and Carlos Fávaro (Agriculture) met to finalize proposals to be presented to Mr. Lula this Friday. President Lula recently urged his cabinet to expedite the creation of a plan to lower food costs, focusing on staples such as rice, beans, and meat, whose rising prices have fueled public dissatisfaction with his administration.
However, no announcements are expected in the coming days. This Friday’s meeting is expected to produce a draft plan to be discussed with private sector stakeholders and internally within the government. Formal measures could be unveiled only in the first week of February.
Finance Minister Fernando Haddad dismissed speculation that the government is considering subsidies or tax cuts to reduce food prices, calling the rumors “unfounded.”
“These rumors serve certain interests. There is no fiscal room for this, nor is it necessary, as this type of measure won’t solve the problem. Instead, we need to improve competition, the business environment, and our imports,” Mr. Haddad said.
He mentioned that one option under consideration is enhancing the portability of the Worker’s Food Program (PAT). Additionally, a stronger harvest in 2025 and the rise of the Brazilian real against the U.S. dollar are expected to help lower food prices.
“I believe we have room to improve the Worker’s Food Program. There’s regulatory space for the Central Bank to step in,” Mr. Haddad noted, referring to the program’s portability issues. “Although portability is legally established, it’s not functioning properly due to a lack of regulation by the Central Bank.”
Food expiration
Mr. Haddad suggested that proper regulation could lead to a reduction in food prices, including meals consumed outside the home.
“If you lower intermediary costs and eliminate the need for workers to sell their food credits, it could have a favorable impact on food prices,” he explained.
Government officials ruled out using imports or easing food expiration rules, as well as measures with significant budgetary impacts.
The idea of relaxing food expiration standards was proposed to Mr. Lula by the Brazilian Supermarket Association (ABRAS) last year. However, the government and President Lula, already facing communication and image crises, want to avoid giving the impression that they are allowing the sale of spoiled food to the population.
On this topic, Mr. Haddad remarked that ABRAS has the right to make suggestions, but these do not necessarily become public policies.
He also noted that projections by the Economic Policy Secretariat of the Finance Ministry point to a “strong harvest” in 2025, which should help reduce food prices. Additionally, the declining dollar is expected to provide relief.
This week, Edegar Pretto, president of the National Supply Company (CONAB), told reporters that the agency is developing a program to establish a network for affordable food supply. The initiative aims to map areas where low-income populations pay the highest prices for food and intervene to ensure fairer prices, particularly in urban outskirts.
However, this proposal was not discussed during the meeting between ministers Costa, Fávaro, and Teixeira.
The idea of importing staple foods has negative connotations for the government, particularly for Mr. Fávaro of the Ministry of Agriculture’s. Last year, amid high food inflation, Mr. Lula authorized rice imports to address a shortage caused by a disaster in Rio Grande do Sul. The measure faced legal challenges from producers, and the auction for rice imports was eventually canceled in June 2024 due to allegations of irregularities. Agriculture Policy Secretary Neri Geller was dismissed after it was revealed that a former aide, who co-owned a company with Mr. Geller’s son, was involved in the auction negotiations.
Mr. Fávaro remains cautious and plans to consult the meat sector to explore viable solutions. Key industry representatives, however, have yet to be invited for discussions. As for rice, one government expert noted that little can be done until the harvest begins in March, which could help bring prices down.
With limited fiscal and political room for action, the measures under consideration may not deliver the immediate impact Mr. Lula seeks.
A senior Agriculture Ministry official remarked, “There’s no magic trick or rabbit to pull out of a hat,” emphasizing that Brazil operates as a market economy.
The ministry has reiterated in discussions with the Planalto Palace that there is no food shortage and that Brazil is a net exporter of nearly all agricultural products, with the exception of wheat.
In ongoing talks, some have pointed to the exchange rate as a key driver of rising food prices. Increased purchasing power among Brazilians is also cited as a factor. Some government officials believe the country’s large-scale soybean production reduces the availability of land for staple crops, driving up food costs. However, Agriculture Ministry representatives dismiss this as an “ideological perspective.”
*By Fabio Murakawa, Renan Truffi, Rafael Walendorff e Ruan Amorim — Brasília
Reduced emphasis on tariff policies at the start of the new U.S. administration is providing support for Latin American currencies
01/23/2025
A softened outlook on U.S. trade tariffs under President Donald Trump contributed to a significant drop in the dollar on Brazil’s local market, with the currency falling below R$6 to close at its lowest level since November 27. This date marked the announcement of Brazil’s fiscal measures package on national television.
The real’s strengthening was further supported by reports of foreign capital inflows into Brazil and the unwinding of short positions established during last year’s market turbulence. The Brazilian real emerged as the best-performing currency among the world’s 33 most liquid currencies on Wednesday (22).
By the end of the day, the exchange rate per U.S. dollar had dropped 1.40% in the spot market, closing at R$5.94. Meanwhile, the euro fell 1.38% to R$6.19. The U.S. currency also weakened against other emerging-market currencies, especially in Latin America, losing 0.82% against the Mexican peso, 1.26% against the Chilean peso, and 1.15% against the Colombian peso.
On Tuesday evening, in the Oval Office, Mr. Trump threatened to impose 10% punitive tariffs on China, citing an influx of the opioid fentanyl, which he attributed to routes through Mexico and Canada. While the market had anticipated tariffs as high as 100%, the lower rate provided relief, particularly as no additional tariff measures were announced during Mr. Trump’s first days in office, a move that many had feared.
Market sentiment
Huang Seen, fixed-income and multi-market director at Schroders Brazil, said market participants had positioned themselves for a harsher trade policy, expecting Mr. Trump to begin his term with sweeping tariff measures.
“(Leading up to Mr. Trump’s inauguration) There was significant long positioning in the dollar, both against emerging-market currencies and those of developed nations. The risk was clear: if no tariffs were announced immediately, we could see a reversal or unwinding of these dollar positions. The last three days suggest that’s precisely what is happening,” Mr. Seen said.
Schroders maintains a cautious but constructive view of the Brazilian real, particularly against a basket of non-dollar currencies. Mr. Seen noted that the Central Bank’s strict monetary policy supports holding long positions in the real while avoiding Brazilian equities, even with their attractive valuations. “The challenging economic environment will likely weigh on companies,” he added.
Luis Garcia, chief investment officer at SulAmerica Investimentos, observed that Mr. Trump has been focusing more on immigration issues than on trade tariffs. “This shift in focus has relieved pressure on currencies tied to major trade markets, particularly those linked to China,” he said.
Mr. Garcia added that, compared to Mexico, Brazil has been less affected by Mr. Trump’s immigration agenda, making the real more attractive to investors. “Emerging-market investors often rotate between countries, and the real has become more appealing now, especially given Brazil’s interest rate environment and the Central Bank’s recent moves to curb volatility,” Mr. Garcia explained.
Foreign capital inflows have also boosted Brazil’s assets. Over the last four trading days, the B3 stock exchange saw foreign inflows exceeding R$10 billion, largely driven by Cosan’s sale of Vale shares. Additionally, Central Bank data showed a net positive financial flow of $1.2 billion between January 13 and 17, with a total net inflow of $806 million during that period.
While the currency markets experienced notable gains, the Ibovespa saw a more subdued performance, closing down 0.3% at 122,972 points. Losses in Vale’s stock, which dropped 2.52%, and Petrobras shares, down 1.01% (ordinary shares) and 0.56% (preferred shares), weighed on Brazil’s benchmark stock index.
In the commodities sector, uncertainty about U.S. tariff policies has led some firms to reduce exposure. Ricardo Kazan, commodities manager at Legacy Capital, described the environment as highly uncertain. “We don’t yet know if tariffs will be imposed or the rationale behind them. They could serve as a negotiating tool for the fentanyl issue or to address the U.S. trade deficit,” Mr. Kazan said, adding that he expects some form of tariff to be implemented.
The interest rate market also reflected the dollar’s decline, with future rates closing lower. The January 2026 interbank deposit (DI) rate fell from 14.96% to 14.92%, while the January 2031 DI rate dropped from 15.03% to 14.96%.
“Considering how prominent tariffs were during Trump’s campaign, it’s surprising they haven’t been emphasized more since his inauguration,” noted Citi’s global macro strategy team in a report. The bank suggested that broad-based tariffs are now less likely, while specific measures targeting Canada and Mexico would likely remain below 25%. However, China is expected to remain a priority for Mr. Trump’s trade policy in his second term
*By Arthur Cagliari, Gabriel Roca, Bruna Furlani, Gabriel Caldeira e Maria Fernanda Salinet — São Paulo
Brazil laments US withdrawal from agreement to curb climate change, but says decision ‘can be circumvented’
23 de janeiro de 2025
The Paris Agreement, launched in 2015 to curb climate change, was ratified by almost all of the international community, except Iran, Libya and Yemen. – Pxhere
The Brazilian ambassador stressed that the United States, one of the world’s biggest polluters, is “an essential player” in the fight against climate change.
However, despite the decision of the far-right billionaire-turned-president, who had already done the same during his first term (2017-2021), “It doesn’t mean that the agreement can’t find a way around” this absence, said the secretary of Climate, Energy and Environment at the Brazilian Ministry of Foreign Affairs.
Brazil and China’s leading roles
China expressed concern about Trump’s announcement through Foreign Ministry spokesman Guo Jiakun. “Climate change is a common challenge faced by all of humanity and no country can remain indifferent or solve the problem alone,” said the representative.
During the first US withdrawal from the climate agreement, Beijing upheld the Paris Agreement and did not reject long-term goals. Currently, China produces more than half of the world’s electric vehicles, 70% of wind turbines and 80% of solar panels, essential measures for combating carbon emissions and climate change worldwide.
“China’s performance in implementing green technologies could be a lifesaver,” Li Shuo, an expert at the Asia Society Policy Institute, told AFP.
At the COPs, Beijing is considered an indispensable player. The country informally leads negotiations with rich countries on behalf of BRICS, a group of developing countries of which Brazil is a member and will temporarily preside in 2025.
“BRICS exists to build things. We have a lot of things to work on together. There is no focus on other countries and leaders,” stated Eduardo Saboia, a Brazilian diplomat responsible for the groups, during a recent interview with AFP before Trump’s announcement.
“This can possibly be a year for the Global South to lead discussions,” assessed Tim Sahay, co-director of the Net Zero Industrial Policy Lab at Johns Hopkins University.
COP30 in Brazil and countries’ positions
At COP 30 in Belém do Pará, Brazilian diplomats will be promoting an increase in financial aid from developed countries to support developing countries in their energy transition process, a target that was not met at COP 29 in 2024 in Azerbaijan.
It will also debate the “adaptation issue”, highlighted in Brazil last year, especially after the floods in Rio Grande do Sul.
COP 30, which will mark the tenth anniversary of the Paris Climate Agreement, will be an opportunity to review countries’ most recent commitments to reduce their greenhouse gas emissions.
The 2015 Paris Agreement to combat climate change has been ratified by almost the entire international community, with exceptions such as Iran, Libya and Yemen. Now, governments have until next month to submit to the United Nations a revision of their climate goals until 2035.
Despite hosting the event, Brazil defends its right to continue exploiting hydrocarbon resources. According to the Brazilian government, organic compounds can generate clean energy thanks to its water resources, despite the need to extract them from oil, which is considered a polluting energy source.
A similar understanding is found in India, whose Prime Minister, Narendra Modi, talks about his country’s “leadership” in solar and wind energy, while defending coal exploitation.
The European Union, on the other hand, has a long tradition of climate leadership and has reduced its emissions by 7.5% between 2022 and 2023, well ahead of other major rich countries.
“The Paris Agreement remains humanity’s greatest hope. Europe will stay the course and continue to work with all nations that want to protect nature and stop global warming,” said Ursula von der Leyen, head of the European Commission.
But countries like Germany have already asked the European Commission to slow down the energy transition in sectors like the car industry.
Other small players are showing goodwill, such as Colombia, which is leading international efforts to gradually eliminate oil, coal and fossil gas, even though they are the country’s main source of foreign revenue.
The nation’s harvest declined 1.6% from 2023 levels, reports Conab
01/23/2025
Brazil produced 54.2 million 60-kilo bags of coffee in the 2024/25 harvest, according to data released yesterday by the National Supply Company (CONAB). This volume is 1.1% below the agency’s previous estimate and represents a 1.6% decline compared to the 2023 harvest.
This was Conab’s fourth report on the 2024/25 cycle, which has concluded across all coffee-growing regions, including Espírito Santo’s later-harvesting areas. Despite the decline from 2023, the harvest is 6.5% higher than the 2022 cycle, another positive biennial harvest when productivity is naturally higher due to the crop’s alternating high and low-yield years.
The past four years have been challenging for Brazilian coffee growers, marked by adverse weather conditions, including frosts, extreme heat, droughts, and erratic rainfall. These events have severely impacted plant performance.
In 2024, average productivity across Brazilian coffee plantations dropped 1.9% from 2023, reaching 28.8 bags per hectare. This decline was largely attributed to unfavorable weather conditions in the prior year affecting central coffee-growing regions.
While the dry weather during winter and early spring helped accelerate bean ripening and harvesting, the hot, arid conditions caused uneven bean development, reducing quality. Many crops yielded a mix of green and ripe beans within the same batch.
In some areas, smaller beans—below standard size—needed to be harvested, requiring more beans to meet the commercial standard of 60 kilos per bag. Additionally, the yield of processed coffee fell, with lighter-than-usual beans exacerbating the situation.
In Minas Gerais, Brazil’s leading coffee-producing state, the harvest totaled 28.1 million bags, a 3.1% decline compared to 2023. Coffee plantations in the region faced significant challenges due to prolonged droughts and high temperatures after April when rainfall virtually ceased.
This weather pattern severely impacted conilon coffee production, which dropped 5.9% to 14.6 million bags. In contrast, arabica coffee production grew by 1.8%, reaching 39.6 million bags.
In Espírito Santo, another key coffee-producing state, the conilon harvest fell 3.1% to 9.8 million bags, largely due to episodes of intense heat between October and December 2023.
In São Paulo, coffee plantations fared better, with the harvest increasing 8.2% to 5.4 million bags. However, this was lower than the 11.5% growth initially projected, as extended droughts and high temperatures impacted productivity.
Bahia also saw coffee production decline, with the harvest totaling 3.1 million bags, a 9.7% drop from 2023. The state’s main crop, conilon, fell sharply by 14.8% to nearly 2 million bags, while arabica coffee production increased slightly by 0.8%, reaching 1.1 million bags.
In Rondônia, coffee production faced a significant downturn due to adverse weather at the end of 2023 and a reduced cultivation area. As a result, conilon output in the state plummeted 31.2% to just over 2 million bags.
UN conference in November aims to transform negotiations into concrete actions to accelerate global climate response, says Ambassador André Corrêa do Lago
01/22/2025
Ambassador André Corrêa do Lago takes the helm of the upcoming UN Climate Change Conference, COP30, set to take place in Belém this November, as the world surpasses the critical 1.5°C global warming threshold. At the same time, the United States withdraws from the Paris Agreement under President Donald Trump’s directive. “We cannot give up,” Mr. Corrêa do Lago told Valor in an interview.
As Brazil’s Secretary for Climate, Energy, and Environment, he described Mr. Trump’s decision as “a significant shift in the stance of the American government and certain economic sectors,” but noted that the U.S. is a country with many facets, “ranging from the federal government to science, business, universities, and subnational governments (…). We are still studying how we can constructively engage with these various dimensions.”
Mr. Corrêa do Lago emphasized that “the COP is not just about negotiating documents but serves as a tool to achieve tangible results.” He stressed the need to accelerate the transformation of past negotiations into “real actions that impact countries, people, and economies.”
Here are excerpts from the interview:
Valor:What are your expectations regarding the United States’ role in climate action under President Trump, following the U.S. exit from the Paris Agreement?
André Corrêa do Lago: The U.S., like Brazil, represents multiple realities, from the federal government to science, business, universities, and subnational governments. What we see today is a significant shift in the stance of the American government and certain economic sectors within the U.S. We are still studying how we can constructively engage with these various dimensions of the United States to combat climate change effectively.
Valor: COP30 takes place as the global average temperature surpasses 1.5°C. How do you view this immense challenge?
Mr. Corrêa do Lago: The 1.5°C threshold is one of the key benchmarks of the Paris Agreement, which also aims to keep temperatures well below 2°C and, if possible, at 1.5°C. This is a long-term projection. The recent news that this threshold was exceeded in 2024 is deeply concerning. However, this information can be interpreted in different ways. Unfortunately, some might say, “We’ve already crossed 1.5°C, let’s give up.” We cannot give up.
Science makes it increasingly clear that once we surpass 1.5°C, climate threats become ever more tangible. We saw this in 2024, as millions of Brazilians directly experienced the consequences of climate change. Reaching 1.5°C only underscores that the urgency of climate action is even greater than previously thought and that we must act faster.
Valor: The multilateral system is under scrutiny. What role does COP30 play in this context?
Mr. Corrêa do Lago: I believe even the harshest critics of COPs recognize that, from a negotiation standpoint, these conferences have achieved positive decisions, texts, principles, and initiatives. However, we must acknowledge that the implementation of what has been negotiated has not advanced at the pace required by the urgency of the climate crisis.
We are convinced that COP30 must accelerate the translation of all negotiated agreements into real actions that directly impact countries, people, and economies. COP30 should be viewed as a tool to correct course and restore public confidence that COPs are not just about negotiating documents but serve as a tool to achieve tangible results.
Valor: What might be the central theme of COP30?
Mr. Corrêa do Lago: There are themes predetermined by the negotiation process. Brazil has a mandate in the financial area and must address issues related to adaptation, technology, and a just transition. All these topics are already on the agenda.
Beyond the negotiations, there’s an opportunity to launch various initiatives within the action agenda. In this context, the topic of forests is unavoidable. Hosting COP30 in Belém brings a focus on forests, which have often been viewed negatively due to deforestation and wildfires. However, forests can play an extraordinarily positive role—not only through their preservation and efforts to curb deforestation but also through restoration. Presenting forests as a positive factor in combating climate change is a key goal.
Valor: In Baku, it was established that COP30 will negotiate the Baku-Belém roadmap for $1.3 trillion in climate financing by 2035. How do you envision structuring this roadmap?
Mr. Corrêa do Lago: We will work with the Ministry of Finance, the Central Bank, and multilateral organizations. This effort has already begun through the Climate Task Force at the G20. We will continue this work because transitioning to $1.3 trillion is an immense challenge.
We need to engage with leading economists, integrate climate considerations into the global economy, and determine how financial resources can be mobilized more quickly and efficiently. Speed is a priority.
Valor: What will your strategy be? Will you travel and engage with key stakeholders?
Mr. Corrêa do Lago: The COP president has an intense pre-set agenda, as they are expected to attend the top annual meetings worldwide, such as the G7, the BRICS summit, and the African Group. These international gatherings bring together key authorities and provide opportunities to deliver strong messages.
Additionally, we need to visit key countries to prepare negotiations well in advance. Brazil does not engage in diplomacy by surprise. We have a diplomacy rooted in the outcomes of long negotiations and great respect for our counterparts. This will also require a significant number of trips.
We are also planning to establish advisory councils—a scientific council, a financial council, and a just transition council. These groups will include national and global special envoys, allowing us to draw on expertise across various areas. Over the next several months, we aim to listen to their expectations and gather insights on what all these stakeholders consider achievable outcomes for COP30.
Valor: Why is there so much anticipation for a COP hosted by Brazil?
Mr. Corrêa do Lago: Part of it stems from Itamaraty’s diplomatic tradition in this area. Brazil’s Foreign Ministry has played a positive role in negotiating several major international agreements, which creates expectations for strong results.
Another key element is President Lula, who has been a particularly important figure, as he is one of the leaders who strongly believes in multilateralism, science, social justice, and poverty reduction—all of which are central issues in the climate change debate.
In some wealthy nations, efforts to combat climate change, such as transitioning to renewable energy, have led to higher electricity bills, eroding public support as these measures are perceived negatively. The president is keen for us to emphasize the importance of a just transition and climate justice.
Climate change is already significantly impacting transportation, cities, energy, and agriculture. We must engage in broad discussions with various sectors, including the private sector, to address these challenges comprehensively.
Valor: What are the biggest challenges in combating the climate crisis?
Mr. Corrêa do Lago: The first concern is raising awareness of the urgency. Science tells us we have very little time. Preferably, according to the IPCC (Intergovernmental Panel on Climate Change), we have until the end of the decade to implement high-impact initiatives.
The second dimension is financing. I believe it’s too narrow a view to think that climate financing should be restricted to specific climate funds. Climate issues need to become a natural part of all financial flows, investments, and government programs.
In this regard, Brazil has set an example with the commitment from the Ministry of Finance. Through the Ecological Transformation Plan, the ministry is already developing policies, in coordination with the government, to guide Brazil toward a modern economy. This is an economy where certain decisions could position Brazil with significant comparative advantages.
Valor: Is this why COP30 is being referred to as the turning-point COP?
Mr. Corrêa do Lago: Partly, yes. But COPs have traditionally focused heavily on negotiations. We are convinced that, for this agenda to gain broader support and convince more people, we need to demonstrate action—tangible, positive results that impact the economy and the lives of the most vulnerable populations. This won’t be a COP like previous ones.
Valor: How will Brazil ensure all societal voices are heard?
Mr. Corrêa do Lago: We will listen extensively and learn a lot. We are considering forming councils representing youth, businesses, science, and finance. Among the last four COPs, Brazil stands out as the country with the most dynamic civil society. President Lula wants civil society to play a central role in this COP.
*By Daniela Chiaretti — São Paulo
(Fabio Murakawa in Brasília contributed reporting.)
