May 23, 2018 / 6:31 PM / a year ago

Brazil withholds corn subsidies owed to farmers, grain handlers

SAO PAULO, May 23 (Reuters) - Brazil’s government has not paid out subsidies pledged to corn producers and grain handlers that were due weeks ago, blaming recipients’ faulty documentation, farmers and a state agency told Reuters.

Some 8.71 million tonnes of corn were traded via government support programs in 2017, representing 9 percent of Brazil’s output that season, according to food supply and statistics agency Conab.

Conab, which administers the PEP and PEPRO programs, budgeted 499 million reais ($137 million) in subsidies to farmers and trading firms for 2017, providing state compensation for selling and shipping corn when prices were depressed following a bumper crop.

In a statement, Conab confirmed only about a fifth of the total subsidies, or $27 million, had been scheduled for payment through last Friday.

Brazil is the world’s third-largest corn producer and second-largest exporter, with a portion of its production relying on the subsidies last year.

The payments apply to the 2017 crop, and the government is not expected to use its corn support programs in 2018 as prices rebounded after a drought cut output in Brazil and Argentina.

Trading firms which took part in the program - including Brazil’s Amaggi Exportação e Importação, Cargill Inc and Archer Daniels Midland - have only received 25 percent of payments owed while farmers received around 18 percent, Conab said.

“In some regions producers are not being paid,” said Bartolomeu Braz Pereira, head of the national grain association Aprosoja, who blamed “red tape” for the delays.

Conab cited “inconsistencies” in the documents filled out by the farmers and trading firms, denying any budget constraints for withholding payments.

“Payments will be scheduled after the parties regularize documentation,” a Conab spokeswoman said.

Amaggi and ADM did not immediately respond to requests for comment. Cargill declined to comment.

Moacir Smaniotto, who farms 20,000 hectares (49,420 acres) in Mato Grosso, said he currently has only received 30 percent of the subsidies after taking part in the support programs.

Another grower, Dirceu Ogliari, said his payments were due between February and March, but he had not received payment as of last Friday. Ogliari said he sold 110,000 60-kilogram corn bags through the government programs in 2017.

Last year, the PEP corn subsidy program ran almost weekly reverse auctions in which trading firms bid the lowest subsidy they would accept to ship corn purchased at a minimum government-set price. The separate PEPRO program allowed farmers to receive compensation for selling their corn below the government’s minimum price. ($1 = 3.6267 reais) (Reporting by Ana Mano Editing by Marguerita Choy)

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