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Brazil farmers face crisis under new freight rates

According to a Brazilian Agro Magazine yesterday information, Brazilian soybean and corn sectors alone are paying R$ 500 million ($132 million) more per day in freight costs following the implementation of new minimum rates that have pushed the farm sector into emergency mode. Since the federal government implemented minimum freight rates across the country to try to end a crippling truckers’ strike on 30 May, the country’s farm sector has slowed operations by half, as affirmed the magazine.

The Minister of Agriculture said in a meeting, that the minimum rates that agricultural companies must pay truckers has meant additional costs of R$ 10 billion ($2.65 billion) for the corn and soybean sectors alone over the 20 days it has been in force, or roughly half a billion R$ a day. As a response to the prohibitive new freight rates, grain and other commodities producers have been reducing their shipments to the ports by truck.

This has triggered R$ 135 million ($35 million) in demurrage costs for ships waiting offshore that have been delayed in loading cargoes, as estimated the Minister of Agriculture. Justice Fux, who oversees cases addressing the constitutionality of new legislation, is reviewing more than 30 requests for injunctions representing several segments of the Brazilian economy opposed to the new freight rates. Further, he said that we are facing an emergency adding that he would insist on an injunction suspending the new rates if some accord is not reached between the productive and transport sectors soon.

The national transport regulator ANTT, meanwhile, announced public hearings over the new minimum freight rates that will only wind up on August 3.  They said that half the farm sector is idle because of the higher freight costs. The more time that passes, the bigger the losses grow. No resolution to the problem has been reached yet and both sides will meet again with Justice Fux on June 28 to try to reach a consensus.

President Temer’s administration has been largely hands-off regarding the minimum freight rate talks, except for the presence of the Attorney General Grace Mendonca, preferring to let the judiciary solve the problem created by government’s concessions to the truckers.



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