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March 4, 2015

Truck Strike causes Loses for Brazilian Poultry and Hog Producers

The truck driver strike in Brazil has eased considerably, but it still is not completely over especially in southern Brazil. The state with the most remaining difficulties is Rio Grande do Sul where seven roadblocks were still in place as of Tuesday afternoon. At these roadblocks, cars and busses were getting through as well as trucks carrying perishable good and animal feed, but not trucks hauling grain or general cargo. In the state of Parana, there are still 13 protest sites alongside the highways, but traffic including trucks are getting through.

In the state of Mato Grosso, which is the principal grain producing state in Brazil, there were no roadblocks as of Tuesday morning and the traffic was flowing normally. This is a vast improvement from last week when at its height there were over 100 blockades in ten different Brazilian states.

Most of the roadblocks came down over the weekend as local police and security personnel took a much harder line toward the protestors. Local judges also starting levying fines of R$ 5000 to R$ 10,000 per hour against protestors for each hour the roadway was closed.

Tensions also eased earlier this week with the start of negotiations in Brasilia between the federal government and various striking groups over trucker's concerns about high fuel costs and low freight rates. There is no timetable for when these negotiations will end and protest organizers have stated that they would not hesitate to block the highways again if the negotiations fail to make headway.

As the trucker strike ebbs in Brazil, poultry and hog producers are cataloguing their losses. According to the Brazilian Association of Animal Protein (ABPA), the poultry and hog sector realized losses in the range of R$ 700 million reals due to the strike.

Between Monday and Friday of last week, they estimate that 70% of the slaughter capacity for poultry and hogs in southern Brazil was impacted by the strike. At least 60 processing facilities had either closed completely last week or were operating at reduced capacity. Many of the facilities that had closed last week were reopened on Monday, but not all of them.

Poultry and hog producers probably suffered the most losses due to feed mills not being able to make on-farm deliveries and there were numerous reports of chickens dying from a lack of feed. Fuel deliveries were also disrupted and some poultry producers reported chickens dying due to a lack of fuel to run generators needed for cooling fans.

Poultry exports were also disrupted by the strike. At the Port of Itajai in Santa Catarina, which is the main port for poultry exports, exporters are reporting that their warehouses are filled to capacity with refrigerated containers full of poultry products because they were unable to move the containers to loading facilities during the strike.

Grain deliveries to the ports were also disrupted, but they are slowly returning to more normal levels. The Port of Paranagua reported as of mid-afternoon on Tuesday that 500 trucks had arrived at the port to start the restocking of the soybean inventories. On a normal day at the port, approximately 950 trucks arrive carrying soybeans. The Port of Paranagua had essentially run out of soybeans earlier in the day on Tuesday before the truck numbers started to increase later in the day.

Estimates are that it will take several weeks or longer before the entire situation in Brazil is normalized. Everything now needs to be restocked including: soybean crushing plants, processing facilities, food manufacturing facilities, feed manufactures, dairies, meat processing facilities, poultry and hog producers, exporters, etc. Everyone involved is certainly hoping that negotiations in Brasilia are successful because they can ill afford the repeat of the last several weeks.