CNA files ADI 7664 against rice imports

The Brazilian Agriculture and Livestock Confederation (CNA) filed a lawsuit with the Federal Supreme Court (STF) seeking a declaration of unconstitutionality of the Federal Government's measure relating to the import of up to one million tons of rice by the National Supply Company (Conab). Direct Unconstitutionality Action 7664 (0144809-57.2024.1.00.0000) was distributed to minister André Mendonça. Shortly after the filing of the action, the Federation of Rice Growers Associations of the State of Rio Grande do Sul (Federarroz) petitioned the process requesting its admission as amicus curiae.

The action aims to declare the unconstitutionality of Provisional Measure 1.217/2024; Provisional Measure 1.224/2024; interministerial decrees MDA/MAPA/MF 3/2024 and 4/2024; and GECEX Resolution 593/2024.

In the initial petition, the following constitutional provisions were mentioned as parameters of the requests:

• art. 5th, LIV (principle of proportionality);

• art. 170, caput (principle of free enterprise and freedom in the development of economic activity);

• art. 170, IV (principle of free competition);

• art. 170, V, and art. 5th, XXXII (consumer protection);

• art. 187, caput (agricultural policy planned and executed with the participation of the productive sector);

• art. 187, II (agricultural policy that takes into account prices compatible with costs and marketing guarantee).

According to the CNA, rice imports have the potential to disrupt the sector's production chain, creating price instability and harming local producers. The entity emphasizes that the measure disregards the grains already harvested and stored, compromising the economies of rural producers, who are already suffering from the impacts of the floods. "It will affect a production chain with the potential to disrupt it, creating price instability, harming local rice producers, disregarding the grains already harvested and stored, and also compromising the economies of rural producers who are already suffering today", stated the CNA.

The government justified the measures to guarantee internal supply in the face of the impacts of the floods in Rio Grande do Sul, the main producer of the cereal. However, the CNA highlights that 84% of the planted area in the state was harvested before the start of the rains, eliminating the risk of shortages. "Realistic data from the sector indicates that the 2023/2024 harvest in Rio Grande do Sul was approximately 7,1 million tons of rice, a level close to the volume harvested by the State in the 2022/2023 harvest, which was 7,239 million tons, according to data from the Institute Rio Grandense do Arroz (Irga)", emphasized the entity.

Furthermore, the CNA argues that rural producers, especially those in Rio Grande do Sul, were not consulted in the process of formulating the cereal import policy. "Not only the local unions, but also the Agriculture Federation of the State of Rio Grande do Sul (Farsul) and the CNA itself hold relevant technical information and rice production and harvest data that demonstrate that the risk of shortages does not exist and that the rice import policy would prove to be disastrous and contrary to the functioning of the market", points out the action.

The CNA warns that the import of rice constitutes an abusive measure of intervention by the Public Power in economic activity, violating the Constitution and restricting free competition. The entity also highlights that rice produced in Rio Grande do Sul will suffer from predatory competition from foreign rice, subsidized by the Federal Government and sold in Brazil outside the economic parameters of natural price fixing.

Finally, the CNA emphasizes that, while rural producers in Rio Grande do Sul are required to follow strict conservation and storage certification standards, in addition to sanitary requirements, imported rice is not subject to these same conditions. "This facilitated condition unbalances competition in favor of foreign products", concludes the entity.

UPDATE on 06-06-2024

In a decision dated June 5, 2024, Minister André Mendonça ordered the subpoena: from the President of the Republic; the ministers of Agrarian Development and Family Farming, Agriculture and Livestock and Finance; and the executive management committee of the Chamber of Foreign Commerce. Everyone can present their arguments within five days. Afterwards, within three days, the Attorney General of the Union and the Attorney General of the Republic must speak out.

Afterwards, the request for a precautionary decision will be analyzed. The minister understood that it was not the case to issue a monocratic decision suspending the effectiveness of the questioned acts, as "In this first examination, no immediate damage or loss is seen, capable of making the prior collection of the usual manifestations unfeasible".

The minister also admitted in the process, as amicus curiae, the Brazilian Association for Economic Freedom (Able).

They asked to join the action, as amici curiae (plural), Fábio de Oliveira Riveiro and Brazilian Rice Industry Association (Abiarroz). The minister has not yet evaluated these claims.