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April 30, 2019

Brazilian Exporters Unhappy about Increase in Freight Rates

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

The National Association of Cereal Exporters in Brazil (Anec) expressed their displeasure over the increase in freight rates earlier last week as a way to avoid another threatened truck driver strike.

Anec continues to feel that the mandatory minimum freight rates are inefficient and unconstitutional and that they pose a threat to Brazil's commodity exports. Anec contends that international grain prices are set months in advance and the government's interference in the marketplace for freight makes it nearly impossible to execute forward contracts. Anec members indicate they have lost billions of dollars with the higher freight rates and the continued upward adjustment in the cost of freight makes the situation even worse.

The National Land Transportation Agency in Brazil (ANTT) increased the freight rates last week an average of approximately 4% due to increases in diesel fuel prices. They have the authority to adjust freight rates every six months if the price of diesel fuel increases or decrease by 10% or more during the previous six months.

Brazilian farmers will ultimately be charged with paying the higher freight rates. If exporters feel they are uncompetitive in the world market, they will be forced to lower the prices being offered to Brazilian farmers.