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Brazil tilapia exporters win raw material tax breaks

Further boost for producers already benefiting from weak domestic currency.

Brazilan tilapia exporters stand to benefit after the Brazilian government approved a series of tax breaks on raw materials, a move aimed at boosting overseas exports.

The measures requested by the industry provide tax relief amount to 5 percent of the cost of finished products, a spokesperson at trade body Peixe BR told IntraFish.

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Tax exemptions will cover all raw materials required to produce, distribute and market tilapia and its byproducts for export markets, but won't be applicable to fish produced for domestic consumption.

Brazilian companies have long complained about "Custo Brasil" -- Brazil Cost -- a myriad of taxes imposed on their products and services by municipal, state and federal governments that render them noncompetitive.

Details of the tax breaks, including the start date, will be finalized at a meeting in the capital city Brasilia on Sept. 24.

The weakness of the Brazil's currency was already helping producers before this announcement.

Brazilian tilapia exports to the US market could double over the next 12 months helped by the Trump administration's imposition of tariffs on Chinese products, according to Peixe BR.

Fresh tilapia is flown from Brazil to the United States in fresh fillet form, making it a niche market for Brazilian producers and processors, but President Trump's escalating trade war with China may provide a wider opening.

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The Office of the United States Trade Representative (USTR) released its final list on Monday of approximately $200 billion (€171.3 billion) worth of Chinese imports that will be subject to additional tariffs.

The new tariffs will be effective starting Sept. 24 and initially will be in the amount of 10 percent.

Starting Jan. 1, 2019, the level of the additional tariffs will increase to 25 percent.

Leading exporter GeneSeas, the Sao-Paulo based tilapia producer and processor, annually flies around 900 metric tons of fresh tilapia fillets and 200 metric tons of whole fish to the US market.

GeneSeas sees that figure potentially doubling over the next two years and rising even further if the Trump administration tariffs on Chinese tilapia are maintained and exchange rates remain favorable.

Brazilian tilapia production is forecast to see double-digit growth again in 2018, helped by consumer demand and industry investments.

Production rose more than 13 percent in 2017 to 357,639 metric tons, accounting for more than half of Brazil's 697,000 metric tons of farmed fish output.

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