Some Canadian exporters are awaiting payment from shipments of canaryseed sent to Brazil last spring, says the president of the Canadian Special Crops Association.
The problem stems from a tax investigation involving a group of Brazilian importers that prompted government authorities to freeze the companies’ assets.
“It just so happens that Canadian canaryseed is one of the commodities that are being affected,” Steve Foster said.
Special crop exporters have not been paid for an estimated $200,000 worth of product still sitting in container cars at a border crossing in Brazil.
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Foster said the association is working with the Canadian government to rectify the problem, which has been dragging on since April.
He wouldn’t say which exporters were involved in the shipments, which took place in April and May, but said they broke one of the fundamental rules of doing business with a country like Brazil by failing to demand some form of assurance that payment would be forthcoming.
“Be very careful when going into Brazil. We would recommend that no trades be made unless you’re selling as per letter of credit.”
Isolated case
Andre Lemay, spokesperson for International Trade Canada, also declined to name the exporters for confidentiality reasons but said it appears to be an isolated legal incident and not an international trade barrier.
“Considering the high volume of Canadian exports of canaryseed to Brazil, it’s important to note that these current problems are not endemic to the Brazilian seed market.”
Brazil is traditionally one of the top three buyers of Canadian canaryseed, along with Mexico and Belgium, importing $22 million of product in 2003.
That’s why it is critical exporters learn how to properly conduct business in that region of the world, Foster said.
Agreeing to a cash against document sale gives the importer free terms for 30 days, he added, which can leave exporters “high and dry,” as was the case with this shipment.
And while $200,000 may not sound like a lot of money in the world of international trade, it can be a substantial blow for smaller players in the special crops industry.
Lemay said the latest report from the Canadian embassy in Brazil indicated some movement in the case, although he was unable to provide specifics.
As far as he knows, the shipments are still tied up at customs in Brazil.
