The Brazilian Wheat Industry Association (Abitrigo) warns of the rapidly worsening economic conditions affecting the costs of the wheat milling sector due to the consequences of the conflict in Iran on the Brazilian economy. The combination of high oil prices, a significant increase in diesel and domestic and international freight costs, rising wheat prices in Brazil and abroad, and increased costs for inputs, packaging, and international insurance directly pressures the milling industry's costs and creates a high-risk environment for the entire wheat chain, with the potential for significant impacts on flour prices and the production chain. This negative scenario is compounded by internal factors that worsen the business environment. The creation of PIS/COFINS tax rates on imported wheat and the reduction of tax benefits have increased the tax burden on essential items such as wheat flour. This tax change further restricts the industry's ability to absorb the impacts and increases the risk that some of these adjustments will end up being passed on to the supply chain and the consumer. Even in this adverse context, Abitrigo emphasizes that companies in the sector have been acting responsibly to mitigate more severe effects on Brazilian consumers. Mills have been adopting strategies to optimize inventories, diversify wheat origins and input suppliers, review logistics routes, seek operational efficiency gains, and use price risk management instruments whenever possible. In parallel, the organization maintains a permanent dialogue with authorities and public policy makers, sharing data and scenarios and advocating for measures that contribute to preserving the competitiveness of the supply chain and the security of wheat flour and its derivatives. "Our commitment is to guarantee the stability of the wheat flour supply, an essential product on the Brazilian table, even in an environment of strong global instability," says Abitrigo's CEO, Rubens Barbosa.
This text was translated by machine from Brazilian Portuguese.