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Brazil Truck Blockades Hit Agribusiness
Wednesday, February 25, 2015 11:14AM CST

By Alastair Stewart
DTN South America Correspondent

SAO PAULO, Brazil (DTN) -- After eight days, Brazilian truck drivers' protest over high fuel prices and falling freight rates is starting to bite agribusiness.

The blockades are impeding exporters from sending newly harvested soybeans to port and restricting farmer access to diesel -- vital for continuation of soybean harvest efforts.

"There are farmers who are running out of diesel and will have to stop harvesting soybeans. That's terrible as they work on a tight schedule, harvesting between rains and planting corn straight after," explained Laercio Lenz, head of the farm union in Sorriso, the biggest grain region of Mato Grosso.

Protesters began stopping trucks along the main BR163 highway in Mato Grosso last week, and the No. 1 soy state remains the main focus of the action, but blockades began popping up across Brazil's vast interior this week. As of 9:30 a.m. CST, blockades were operating in nine states, according to O Estado de S. Paulo, a local newspaper.

With access to grain limited, pork and poultry firms have suspended operations at a number of plants in Mato Grosso do Sul and in the south of Brazil. JBS, the world's largest animal protein company, halted work at six plants, while Aurora stopped work at four and BRF, the world's No. 1 chicken exporter, at a further two.

The flow of trucks to ports was also affected. According to Paranagua port, the No. 2 grains port, only 45 trucks containing soybeans or soymeal arrived on Tuesday out of 880 in transit to the port.

Meanwhile, a blockade on the highway leading to Santos port, the No. 1 grains port, caused a three-mile tailback of trucks on Tuesday.

Brazil is entering peak soy export season now that the harvest is 20% complete. Trucks freight about 60% of all soy shipped.

At the moment, neither Santos nor Paranagua have recorded a shortage of soybeans for shipments. But authorities say that could happen soon unless the blockades are lifted.

The government is beginning to react. Public prosecutors obtained court orders to break blockades in four states, including Sao Paulo where riot police cleared access to Santos port last night.

Meanwhile, the presidential office has announced it will set up mediation talks with trucker leaders. Basically, the truckers want the government to lower diesel prices in line with the recent decline in international quotes, review the new truckers' law to allow them to drive 12 hours a day and adopt a new index for freight prices that allows new higher levels.

But the blockades, which let cars and noncommercial vehicles pass but retain trucks, remain in Mato Grosso, along the BR163 road and BR364, and across other key parts of the grain belt.

Mato Grosso farm leaders have attempted to negotiate free passage of soybeans to elevators and diesel to properties. Agreements have been reached, but the problem is a lack of coordination among protest leaders.

"In Sorriso, grain trucks are allowed to reach the elevators, but not leave. But elsewhere they aren't. It's the same with diesel. Some will let tankers through, but others at the next blockade don't," said Lenz.

There is a threat that farmers could lose crops if they don't get diesel soon," said Antoni Galvan, head of the farm union in Sinop, center-north Mato Grosso.

Meanwhile, the elevators in Mato Grosso are starting to fill up.

Brazil's soy logistics are overstretched and the industry relies on everything running smoothly to deal with the massive crops. This year's output is pegged at more than 90 million metric tons (mmt).

The trigger for the protests has been a decline in freight rates as a result of the slowdown in the economy. It can be seen clearly in the decline of grain freights -- Sorriso to Santos port costs R$230 per metric ton ($2 per bushel) in February, down from R$$315 last year.

The decline has helped bolster soybean prices in Mato Grosso this year, but has created another headache in the form of the protest.

Alastair Stewart can be reached at alastair.stewart@dtn.com

(AG/SK)


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