Brazil transport strike could cripple harvest

Brazil transport strike could cripple harvest

More commodity transportation troubles in a country already riddled with infrastructure problems

It's as clear as anything in Rules of the Road: If you want to get Brazilians' attention, keep the soybeans from getting to port. And that's just what truckers and their colleagues in the transport sector did last week in Mato Grosso, Brazil's top soybean-producing state.

Truckers last week blocked several of the main highways used to transport soybeans to ports, in protest against recent increases in the cost of diesel.

A line of trucks stopped by protesters on Brazil's highway BR-163 near Nova Mutum, Mato Grosso. Truckers have blocked the passage of grain headed south to ports and diesel headed north to Mato Grosso fields. Photo by Naildo Lopes

High stakes
The stakes are high for both sides. Mato Grosso producers, with very little on-farm storage, need to get the beans out as quickly as they can. After all, the state soybean harvest is 25 percent done, with corn planters following the combines. And that second-crop corn that will need storage space. But the truckers have their gripes, too. While you were kicking your heels over falling gas prices every time you stopped at the pump, Brazilians haven't seen much price reduction because Uncle Sam is tapping the brakes on the printing presses that have been churning out ever-more dollars for so many years. As a result, fuel costs haven't been so sharply cut in Brazil where each unit of currency buys less and less of goods whose prices are set in dollars.

And then last November, the Brazilian administration allowed state-owned oil company Petrobras to raise its wholesale price to distributors by five percent. Fuel retailers who sell to farmers, naturally, have passed the added expense along to customers. When you add in the strengthening U.S. dollar, it means much higher transport costs.

Farmer reaction
At the same time, it's not hard to imagine producers' angst at the strike right now. With near total dependence on truckers and trucking companies to get their crop out, Brazilian producers are loath to rupture their relationship with the transport sector by not showing their support for strikers. But they've asked that strikers at least let fuel trucks through so they can finish the Mato Grosso soybean harvest and advance on second-crop corn planting.

By last Friday (Feb. 20), it was estimated some 2,400 trucks had been stopped by protesters in the Mato Grosso towns of Nova Mutum, Lucas do Rio Verde, Sorriso and Sinop. Local farmer and agronomist Naildo Lopes says, "On Saturday there were more than 18 trucks hauling diesel that were stopped. We're starting to see a diesel shortage in Nova Mutum… We're partners in the fight, but our soybeans are ready for harvest and there's no diesel. (There could be) big crop losses for producers who are already walking a tightrope…"

The highway blockages are mostly confined to one Brazilian state—Mato Grosso. But farmers there produce a lot of Brazil's soy each year, and they are a long way from ports. They've got little storage, and can hardly afford to get the truckers on whom they depend for moving their product upset. So they're not only walking an economic tightrope, trying to make money as world commodity prices fall—they're also walking a tightrope trying to show support for the transport sector while their 2014-15 crop sits in the field. And there's no guidebook for how to handle that.

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