Brazilian agricultural producers – including soyabean farmers and traders – are still suffering from the impact of the 11-day trucker strike in May that brought the country’s agri goods flows grinding to a halt.
A 26 July US Department of Agriculture (USDA) GAIN report said the strike, brought on by rising fuel prices and a weak real against the US dollar, was still slowing down Brazilian grain and oilseed trade.
As one of the concessions to resolve the strike, which the USDA estimated to have resulted in US$1.75bn worth of losses, the Brazilian government established a temporary minimum freight rate guaranteed to truckers.
However, the policy was immediately criticised by various transportation dependent industries, including agriculture, the USDA noted in the report.
Brazil lacked comprehensive railway or waterway infrastructure in its centre-west regions – where its major agricultural production areas were located – and producers were reliant on trucks to move their products to ports.
But according to Brazil’s National Confederation of Agriculture and Livestock (CNA), the minimum freight rate policy had made transporting goods significantly more costly, increasing freight rates by 50-150%, with leading agri regions impacted the most.
The CNA and other agri associations had challenged the measure in court through more than 50 lawsuits, and the Brazilian congress had also made efforts to make the rate policy permanent, the USDA said.
Decisions in both cases, by the Brazil’s Supreme Court in the first and by the country’s Senate in the latter, were expected by late August.
Major traders had reported that they had, for the most part, stopped participating in the market due to prohibitively high transport costs and the uncertain future of the freight rate policy.
“Since soyabeans are harvested first, this has largely affected their exports so far. However, the safrinha corn harvest is ramping up across Brazil and limited storage space (already filled with soyabeans waiting for export) and expensive freight rates will affect the [corn export rate],” the USDA said.