Deputy Wellington Fagundes (PR/ MT) reflects about the Wet Blue's taxing and his expectations about the productive chain's future in Mato Grosso

Deputy Wellington Fagundes (PR/MT), President of the Commission for Economic Development, Industry and Commerce in the Chamber of Deputies (CDEIC), speaks about Mato Grosso and national leather sector. According to him, there is, in the government, a large worry about the better way to promote the intern industrialization. He believes that the sector needs to improve it's industry to allow the production in the whole chain. His point of view, in relation to the Mato Grosso state, follows the same direction, which means that the ideal action is to export lower leather and manufacture in the own state, gerening aggregated value and possibiliting benefactions to the whole productive chain.

COUROBUSINESS: The growth of the Brazilian livestock, especially in the Center-West, enlarges the opportunities of the States of the region to develop industries of finishing and export of leather. How does Mato Grosso fit in this context?

 

Dep. Wellington Fagundes: Mato Grosso is today the biggest producer of livestock in Brazil , the biggest producer of meat. The state has developed cattle breeding, modifying also the profile of breeding for fattening, as in the confinements, which have grown a lot lately. It has improved the quality of the livestock and so it has improved the quality of the leather. Many tanneries are investing in Mato Grosso, a state that has great opportunities for this type of industry. Unfortunately, until now there has been a very strong weight of export of Wet Blue, and our role is to build a chain of our own. I believe that, through incentives created by the state government, within little time Mato Grosso may hold the manufacture of all the leather chain.

 

  COUROBUSINESS: The offer of raw leather in Brazil – around 44 million units in 2006 – overcomes by far the demand. The way is export. Many tanneries start exporting Wet Blue leather and bit by bit they evolve to produce and export Finished leather. The Brazilian government, by pressure of the footwear industry, taxes the export of WB by 9%. How do you, above all in the capacity of president of CDEIC, see this taxing? Would it be a restriction to the development of the region?

 

Dep. Wellington Fagundes: I have already participated in discussions with the technical team of the Ministry of Development, Industry and Foreign Trade, the minister (Miguel Jorge) is very concerned about the form of our finding the best way to promote the internal industrialization in Brazil . Unfortunately we still have a big volume of export of salty leather, we don't want to go on with this. The Brazilians buy leather items in Argentina , also of very good quality. We also need to improve our industry so that we can produce throughout the chain. Also, my concern as president of CDEIC and even as a veterinary doctor, is that the government may not limit itself to the leather issue. One needs to have care from the production of the ox, the breeding, the technology, the research, the support to all the chain, so that one may get to the so necessary industrialization.

The Wet Blue issues tend to the environmental concern and we need to add value. Brazil has, can and must be a great exporter of industrialized matter, of the leather already ready, of the coat. Our clothing industry is already very strong, the leather industry must follow the same way.

 

  COUROBUSINESS: According to businessmen of the region, the taxing onerates the chain extremity, the producers. How does this affect the cattle breeders of your State?

 

Dep. Wellington Fagundes: If the cold store suffers taxing, it will pay less for the in natura leather, so, who ends up losing is the primary producer, the cattle breeder. We have to create incentives so that the cattle breeder, having the leather valorized, may also take care of the cattle's diseases. A disease like larva ends up harming the quality of the leather, for example. If the producer has a better remuneration, he/she will be concerned about making the necessary applications to produce a material of good quality.

 

COUROBUSINESS: There are claims of entities from all the regions asking for the revocation of the taxing on WB. What do you think of that?

 

Wellington Fagundes: We have already been at the Ministry of Development defending this thesis. We have already talked also at the Treasury Department and, as the president of the Economic Development Commission, I am working so that the issue may be solved as soon as possible and we may stimulate the chain even more.

 

COUROBUSINESS: One expects to export US$ 1 billion Wet Blue leathers in 2007, which would represent US$ 90 million in taxes. There are those who defend that the taxing should be progressively reduced to zero per cent, and the resources, while they exist, should be applied in plans of stimulation to the technological development of the tanneries. How do you see this idea?

 

Dep. Wellington Fagundes: In the State of Mato Grosso , we have a very clear vision of that. We used to live a fiscal war, tax evasion was very strong. Until the government called the producers and the owners of the cold store industry, of the slaughterhouses and managed to sign an agreement defining a quota of cattle to be abated. The rate was reduced to 3% and with this, one increased the collection and tax evasion practically ended. There's no use in abusively increasing the tax load. The more it growes up, the greater the tax evasion and the state ends up collecting less. In the case of taxation over the Wet Blue, which is different from the mentionated examplo, I believe that the gradual decrease is an alternative to be implanted by the government.

 

Revista Courobusiness, Ed. 54 – Set/Out 2007.