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Farmer Losses Mount As Brazilian Trucker Strike Rolls On

PORTO ALEGRE, Brazil (Agriculture.com) - After the biggest truck strike in 15 years that began in February and March, Brazilian truckers are again blocking highways around the country to protest higher fuel costs and low freight prices combined with poor road infrastructure. A meeting between representatives of the movement and the government was held on Wednesday. As there was no agreement, truckers started to block roads by the first hours of the day on Thursday.

The blockades are an issue of deep concern for farmers and deserve a close market-watch as the situation affects at least six important agricultural states of Brazil including Rio Grande do Sul, Santa Catarina, Paraná, Mato Grosso do Sul, Mato Grosso, and Minas Gerais. The states mentioned are big producers of at least one of the following crops: soybeans, corn, rice, coffee, cotton, and wheat.

The Association of Corn and Soybean Growers released a public statement saying that indeed there will be "commercial losses" for farmers in the short-term. As Mato Grosso approaches the second corn crop harvest, which happens in early June, storage becomes an issue of worry. "We're at the peak of the sales and need flux. Buyers need to need to know the price of the freight. At the mid-term, we will have storage problems as we need to ship the beans to make more space for the corn that will be harvested," explained association president Ricardo Tomczyk at the statement. Tomczyk also cited concerns with contract deadlines and repercussions with importers.

Market-wise, the only certain thing is that the soybean price would be pressured in the coming days. "It is yet very premature to estimate consequences for shipments because we don't know the extent of the strike. If the strike is big (in numbers and time), there will be delays on the deliveries at the ports this year," forecasts Porto Alegre market analyst Carlos Cogo in an interview with Agriculture.com.

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At this time, there is no clear sign of when the strike will end. Brazil's Presidency Secretary General, Miguel Rossetto, who participated in the negotiations with truckers, has minimized the impact of the strike and says that the government cannot do much about the truckers' demands. "We cannot do an economic intervention without legal support," announced Rossetto, who also promised to fine the drivers who block the roads. The fines can get up to R$ 100,000 (US$ 35,248) per day.

At the side of truckers, Carlos Dahmer, one of the leaders of the movement in Rio Grande do Sul, promised to continue the strike: "We've started the strike, but only the government can end it," said Dahmer, president of the Union of Independent Cargo Workers of Ijuí. As a form of precaution, this time around several truckers avoided loading the truck and driving if they already knew a stretch will be blocked in their path.

In previous years, Brazil's oil giant, Petrobras, has fixed gas prices lower than the international market. Right now, the company changed the policy to recover recent losses from corruption and mismanagement. At the same time, the government has increased fuel taxes since February 1 to fight a fiscal crisis - one of the factors that pushed the first strike.

"Independent truckers end up suffering a lot with these changes. And owners of fleets also do not want to reduce margins. But the freight prices are made of several factors that cannot change overnight," Augusto Pinho de Bem, a researcher at the Foundation of Economics and Statistics of Rio Grande do Sul, tells Agriculture.com.

For Paulo Moura, a professor of political science at the Lutheran University of Brazil, the strike is a result of a major political and economic crisis that Brazil has lived over the last months. The country faces a severe recession with annual inflation close to 9% and growing unemployment as the Federal Police investigate cases of corruption, and unprecedented mass street riots call for the impeachment of incumbent president, Dilma Rousseff. Moura affirms that the crisis will only get worse in the coming weeks and months.

"I think that truckers feel deceived by this government. There will be no quick solution and a radicalization of the protests can happen. The government is likely to unblock the roads just with a severe lack of supply. The second semester in Brazil tends to be even more critical [politically] with the opening of an impeachment process at the Brazilian Congress," says Paulo Moura in an interview with Agriculture.com.

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