ANNOUNCED AS TEMPORARYNo
On 24 October 2014, the government of Brazil stated that it is going to guarantee the minimum price for the cotton harvest of 2013/2014 and 2014 with a subsidy worth USD 40.67million (101.3million real).
The stated amount will be distributed through the Brazilian farmerincome support program PEPRO. The program is based on theauctionmechanism further described below. The subsidies will continueuntilthe stated volume has been allocated completely.
The announced programs constitute a production subsidy to Brazilianfarmers. Both domestic and international sales are eligible.
The design of the Brazilian farmer income support program PEPRO /Premium Paid to Growers (Premio Equalizador Pago aoProdutor) can bebriefly summarized as follows: The government first sets a minimum price for the eligibleproducts. The government then auctions off a premium to the producers. Theselling price represents the difference between the reference priceandthe premium reached at the auction. The farmer submitting thesmallestpremium wins the right to receive the payment.
The GTA includes state guarantees and other financial incentives thatare likely to affect the restructuring and performance of firms facinginternational competition, whether from imports, in export markets,andfrom foreign subsidiaries.
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