Feb 23, 2015

Grain Trucks Blockaded in Mato Grosso to Protest High Fuel Prices

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

Transportation companies and independent truckers parked their rigs on the two major highways of Mato Grosso last week, BR-163 and BR-364, stopping the movement of grain to protest higher fuel costs and taxes. Passenger vehicles, buses, and trucks carrying live animals were allowed to pass through the roadblocks, while trucks carrying grain and general merchandise were not permitted through.

On Friday, truckers in other Brazilian states such as Parana, Rio Grande do Sul, Santa Catarina, and Goias joined in on the protests. All the truck traffic was liberated over the weekend, but the protestors are expected to return to the highways of Brazil on Monday.

The new Governor of the state of Mato Grosso, Pedro Taques, convened a meeting on Friday afternoon with the various protesting group in an attempt to end the blockades. The central issue for the protestors is the increase in diesel prices and high taxes. The governor indicated that he would set up a commission to look at the possibility of reducing the ICMS tax, which is a circulation tax imposed on goods and services in the state (including diesel fuel) from 17% to 12%. Each state in Brazil is free to set their own ICMS tax rates. He also indicated that he would instruct the commission to look at the possibility of establishing a minimum freight rate in the state.

At the same time, representatives from ten different entities including the Soybean and Corn Producers Association of Mato Grosso, the Infrastructure Counsel of Mato Grosso, and the Industry Foundation of Mato Grosso were meeting with state officials concerning the poor condition or rural roads and bridges in the state. All of these concerns continues to point to the fact that high transportation costs makes Mato Grosso one of the most expensive places grow soybeans of the major producing countries - United States, Brazil, and Argentina.

Farmers throughout Brazil can produce soybeans as well as any farmers in the world. Their problems start at harvest time. The lack of on-farm storage (only 13.6% of Brazil's grain production is stored on farm) and the high cost of transporting grain by truck over long distances greatly reduces the margins for Brazilian soybean producers. The federal government has established a program to turn many of the major highways in Brazil into toll roads in order to generate the revenue needed for improvements and expansion, but the initial implementation of the program has been frustrating slow.

These type of protests that block Brazil's highways are fairly common, but they are usually carried out by the "landless rural worker" or indigenous groups in support of agrarian reform or the government's policies toward the indigenous community. Farmers get into the act as well. Several months ago, Brazilian farmers blocked major highways throughout the country for several days to protest the requirement that they must obtain an annual license plate and pay road taxes for their agricultural machinery similar to trucks and busses. The tax would have been rated on the price of the machinery, which in the case of a new combine, would be extremely high.