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January 29, 2019

Brazilian Farmers facing Higher Freight Rates

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

The cost of freight always increases in Brazil at this time of the year due to the increased demand to transport the soybean crop. The cost is even higher this year due to the new mandatory minimum freight rates. Here are two examples:

The cost to transport soybeans from the city of Cascavel in western Parana to the Port of Paranagua in eastern Parana went from R$ 85 per ton ($0.63 per bushel) in 2018 to R$ 96 per ton ($0.72 per bushel) this year or an increase of 13%. The cost to transport soybeans from Sorriso in central Mato Grosso to the Port of Paranagua went from R$ 260 per ton ($1.95 per bushel) in 2018 to R$ 300 per ton ($2.25 per bushel) this year or an increase of 15%. Similar increases are being reported all across Brazil.

Many producer organizations consider the higher mandatory freight rates in Brazil as unconstitutional. They filled multiple law suites and they took expressed their opposition to these new rates in front of the Brazilian Supreme Court. The Supreme Court said they will rule on this issue, but as of yet, there has not been a decision.

These rates are extremely important to Brazilian farmers because approximately 60% of Brazil's grain is transported by truck to distant export facilities.