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Brazil seafood industry welcomes pro-business stance of controversial new president

Seafood sector hopes country's new leader will bring a business-friendly ethos.

Brazil's new government faces expectations from the country's seafood industry to deliver a business-friendly climate that will allow its various sectors to flourish.

Jair Bolsonaro was elected president this past the weekend despite alarming many inside and outside Brazil with fiery and derogatory comments about women, blacks, gays and indigenous communities.

The former army captain takes office on New Year's Day.

An overhaul of the country's tax system is among the government's first priorities as it has been for a succession of previous new administrations.

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.

But tax reform has always proved elusive in Brazil, not least because of the battle among the country's 26 states along with the Federal District over how and where tax revenues should be allocated.

Brazil's political structure and electoral system also play a part. To get new measures into force, governments either rely on temporary executive orders or are forced to resort to horse trading and alliances with other parties that frequently prove to be short lived.

Mammoth task

Against this background, for whoever won the right to wear the green and yellow presidential sash, the task ahead was always going to be big, with Brazil having being weighed down for the past five years by its deepest recession.

In September leading Brazilian fish canner Gomes da Costa said it expects to see a pick-up in consumption in 2019, following the presidential election and as the economy inches toward better times.

Meanwhile, executives at aquaculture trade body Peixe BR said they are looking forward to discovering who will be responsible for handling the most important issues facing the sector that generates BRL 5.4 billion ($1.5 billion/€1.3 billion) and provides more than a million direct and indirect jobs.

"Peixe BR and the Brazilian aquaculture industry have high and positive hopes in relation to the new government and that responsibility for its activities will return to the Ministry of Agriculture, which it should never have left," the trade body's board said in a statement.

The view is supported by fisheries and processors industry organization Conepe.

The Brazilian aquaculture industry could grow by 7-10 percent per year just by the government speeding up the process of approving licences for producers, Peixe BR said.

There are more than 2,000 licence applications outstanding across Brazil. Seventy percent of them are for tilapia projects.

Weight of bureaucracy

For years ministerial responsibility for fisheries and aquaculture has been shunted back and forth. Any renewed attempts to do this will be resisted by shrimp industry executives who want to retain the Special Secretariat for Fisheries and Aquaculture (SEAP), insisting it has a better understanding of their issues.

Both the aquaculture and shrimp producing industries are frustrated at the many layers of the country's bureaucracy and the time it takes to get environmental approvals. Brazil's shrimp industry also wants a streamlining of regulatory processes.

"We expect a change for the better," said Itamar Rocha, former President of Brazilian Shrimp Breeders Association (ABCC), now working for the organization in a consultancy role.

Given Bolsonaro's hardline stance on promoting Brazilian interests, shrimp producers will expect his government's backing.

Brazil is locked in a long-running trade dispute with Ecuador over shrimp imports from its near neighbor. Imports began to trickle in earlier this after the lifting of an injunction but were again recently blocked on health grounds following a new legal ruling granted in favor of ABCC.

Rocha and Fernando Perri, the founder of Brazil's largest shrimp fast-food chain, Vivenda do Camarão hold starkly contrasting views on the imports of Ecuadorian shrimp. Perri says imports will stimulate competition and reduce prices.

But both are scathing in their assessment of the business climate in Brazil citing stifling bureaucracy weighing on companies' time and budgets.

EU ban

Barring any new development before year end, Brazil's incoming government will also be tasked with helping to restart seafood exports to the European Union.

The Brazilian seafood industry was stung by scathing criticism from EU officials following a visit by inspectors, particularly in relation to the inspection of seafood catches at Brazil's ports, and some of the country's processing methods.

This led Brazil to self-impose a ban on its seafood exports to the EU at the end of 2017.

The EU formalized the ban on Brazilian imports in July, citing public health and hygiene concerns.

Among other things, uncertainty over which ministry has jurisdiction over vessels' on-board processing facilities has hindered efforts to lift the ban.

Caught in the net of regulation

Fishermen and processors want to see a deregulation and simplification of rules governing their sectors to allow them more operational freedom.

"There are many rules for many things and very often these rules conflict, leading to uncertainty," Conepe Technical Director Cadu Villaça said.

Conepe is also urging the government to end the system of shared responsibility between fisheries and environmental ministries, which it says only serves to complicate and slow down development.

"We need to pass everything through just one, knowing that the other has responsibility for managing the environment," Villaça added.

Since that comment, news has emerged that the agriculture and the environment ministries will be merged into a new "super ministry" under Bolsonaro.

The fate of fisheries and aquaculture is currently unclear.

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INDUSTRY REPORT: Inside Brazil's seafood sector

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