AreaBrazil

Commodity GroupOilseeds, oils and meals

CommodityGrains, oilseeds

Date18/06/2018

Policy CategoryOther

Policy InstrumentTransportation policy

DescriptionImplemented temporary reductions in fuel taxes and introduced minimum freight rates to halt a nationwide strike by Brazil\'s truck drivers.

NotesIn May, a nationwide 10-day strike by Brazil’s truck drivers to protest high fuel prices paralysed large parts of the economy. Reportedly, the country’s agricultural production, processing, distribution and exportation networks faced serious disruptions. In an effort to appease truckers, the Brazilian Government introduced temporary reductions in fuel taxes and imposed minimum freight rates. The latter measure has been challenged in the country’s Supreme Court by agriculture and industry groups. Freight costs play a crucial role in many sectors because Brazil’s transport matrix is highly dependent on road transport. Reportedly, uncertain about how transport costs are going to develop, farmers are delaying purchases of fertilizers and other inputs for the next season, while traders are reluctant to sign forward contracts for the forthcoming crop – despite expectations of stronger sales due to the ongoing U.S.-China trade dispute. Private sources reckon that the current, state-imposed minimum freight rates push up average transportation costs for soybean and maize by 17–28 percent.