Brazil May Face Another Crisis with Truck Freight Rates

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazil’s Supreme Court has given the government of President Michel Temer until Friday to explain a recent resolution which establishes a new minimum freight rate. The resolution has received harsh criticism from several sectors, including Brazil’s agricultural sector, which claims that the new, higher, rates will hinder the transportation of this year’s crop.

“The rural producer began to be very affected (by higher rates) and is having difficulties in moving his production,” said the head of the legal department at the National Agricultural Confederation (CNA), Rudy Maia Ferraz.

“With the impasse, producers have halted transportation (of agricultural goods),” concluded Ferraz.

According to the executive the imposition of a minimum freight rate may increase the cost of transportation of food products by up to 152 percent. Ferraz argues that most of the harvest contracts have been signed for the 2018/2019 season, leaving producers to absorb the extra costs. “We cannot make the producer solely and exclusively take on that burden,” says the CNA representative.

“The imposition of tariffs on freight will end with the system of financing, pricing and commercialization that allowed Brazil to be the largest producer of soybeans and the third largest producer of corn in the world,” said the statement released by Brazil’s largest vegetable oil and grain traders and exporters (ABIOVE, ACEBRA and ANEC) earlier this week.

According to the entities, the measure will actually hurt independent truck drivers, stimulating grain traders to invest in own fleets and reducing jobs for autonomous drivers.

The resolution was part of the deal the government made with independent truckers to end the 11-day old truckers’ strike which brought the country to a halt at the end of May.