Jun 01, 2018

Brazilian Meat Sector hit Hard by Truck Driver Strike

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The entire agricultural sector in Brazil was severely impacted by the recent truck driver strike with the meat sector especially hard hit. Essentially all the meat processing facilities in Brazil were forced to suspended operations due to the strike. According to the Brazilian Association of Animal Protein (ABPA), as of Wednesday, some of the 167 meat processing facilities where operations had been suspended, were slowly resuming operations. ABPA reported that 135,000 tons of meat exports were put on hold due to the strike.

The Central Aurora Food Cooperative, which is the third largest poultry and hog producer in Brazil, indicated that they will gradually restart their production and processing facilities.

More than 100 beef processing facilities had suspended operations and 40,000 tons of beef were not exported.

The Agriculture and Livestock Confederation of Brazil (CNA) estimates that producers alone in Brazil lost an estimated R$ 6.6 billion due to the strike. All sectors were impacted from producers of grain, coffee, ethanol, orange juice, milk, tobacco, fruits and vegetables, etc. Due to the suspension of operations at soybean crushing plants and a lack of soybeans and soybean meal at the ports, some grain companies are contemplating declaring "force majeure" because they cannot fulfill their contracts.

The livestock sector was especially hit hard because of the "just in time" supply chain where processors depend on daily delivery of animals for processing and livestock producers depend on timely delivery of feed for their animals. This is the second time in two years that a truck driver strike in Brazil has resulted in severe losses for livestock producers in the form of culled animals and lost sales.

Brazilian grain exports were also impacted by the strike. Ships are sitting empty at the ports of Brazil waiting for fresh supplies of soybeans to arrive at the ports. Even though the strike has ended as of Thursday and almost all the highway blockades had been removed, some drivers had still maintained blockades at the entrance to the Port of Santos. On Thursday, the Brazilian military along with state police managed to remove the last blockades at the port. Port authorities estimate that it might take 7-10 days for loading activities to get back to normal.