Ecuador to Eliminate Wheat Tariffs Under the APBS in 6 Stages
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National Wheat production in Ecuador only covers 2% of local consumption, meaning that 98% is imported, calculating according to data from the Ministry of Agriculture, the country’s demand is 694,000 tons per year.
“The increase in inputs will not allow us to continue growing Wheat, their price has increased by more than 100%, which raises production costs, and we will not be able to make a real profit. The production cost is 600 to 700 dollars per hectare; right now, the sowing is no longer done with the same money,” Mateo Arteaga, a wheat producer, highlighted last year. He added: There is nowhere to sell the Wheat; we use it for local and home consumption.
During 2022, the Ecuadorian government continued granting requests for import licenses based on industry demand. Industry contacts also recently indicated that imported Wheat had been used to substitute for higher-priced local corn. The pasta, bread, and feed industries absorb 100 percent of the local production, representing less than 4 percent of Ecuador’s demand.
Ecuador promotes a policy of Wheat self-sufficiency, but production levels have not come close to meeting demand. On July 9th, 2021, Ecuador’s Foreign Trade Committee issued Resolution No. 009 – 2021, lowering tariffs on 667 products, including 43 agricultural products. The two principal U.S. products benefitting from this tariff reduction are soybean meal (Harmonized System (HS) code 2304.00.00.00) and Wheat (HS 1001.19.00.00).
Until now, these products benefitted from COMEX Resolution 029-2019 and COMEX Resolution 030-2019, which granted a tariff zero percent ad valorem exemption and suspended the application of the Andean Price Band (variable levy) for soybean meal and Wheat until December 31, 2024. With this new resolution, the zero percent tariff will be permanent, and the Andean Price Band will be abolished for these two products. For more information on this policy, please see FAS Quito GAIN Report EC2021-0010.
Ecuador maintains bilateral trade agreements with Peru and Chile, as well as regional trade agreements with the Latin American Integration Association (ALADI) and the European Union (EU). In 2004, Ecuador reached a tariff liberalization agreement with the Southern Common Market (MERCOSUR) and started implementing the agreement in April 2005. Wheat benefits from special treatment within MERCOSUR.
The country grants tariff preferences on the total duty, comprising the ad valorem (basic) duty plus the Andean Price Band System’s (APBS) variable levy. In 2014, Ecuador concluded trade liberalization negotiations with the EU. The agreement entered into force on January 2, 2017. Ecuador will gradually eliminate tariffs under the APBS in six equal stages, beginning when the agreement entered into force.
Wheat stocks are generally based on local production and depend on the quality and quantity of the harvest. Stocks continue being estimated and forecasted lower than previous estimates due to the increased use of available supplies in the market by the growing animal feed sector.
Wheat and Barley Import in Ecuador
According to AgFlow data, Ecuador imported 153,750 tons of Wheat from Canada in Jan-June 2023, followed by the United States (124,255 tons) and Brazil (52,000 tons). In 2021, Ecuador imported Wheat worth $589 million, becoming the 27th largest importer of Wheat in the world. In the same year, Wheat was Ecuador’s 6th most imported product. Ecuador imports Wheat primarily from: Canada ($406 million), the United States ($113 million), and Argentina ($69.9 million).
In 2021, Ecuador imported Barley worth $12 million, becoming the world’s 52nd most significant importer of Barley. In the same year, Barley was Ecuador’s 302nd most imported product. Ecuador imports Barley primarily from: Australia ($7.85 million), Argentina ($4.11 million), and the United States ($29.4k).
Other sources: USDA
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