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January 29, 2021

Brazilian President Asks Truck Drivers to Postpone Proposed Strike

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

On the eve of what could be a devastating nationwide truck driver strike scheduled for Monday, February 1st, the Brazilian President, Jair Bolsonaro, appealed to the drivers to hold off on the strike while the government studies ways to address some of their concerns.

One of their biggest concerns is the price of diesel fuel in Brazil and that got worse earlier this week when the price of diesel fuel in Brazil increased 4.4%. Additionally, earlier this week, several other labor unions in Brazil offered their support for the strike.

One of the ways the government could lower the price of diesel fuel is to lower existing taxes on fuel known as the PIS/Cofins tax. The problem is that the tax is a major source of revenue for the federal government. President Bolsonaro pointed that out in his recent comments that for every one cent reduction in the PIS/Cofins tax, it would reduce government revenue by R$ 800 million reals. If the tax was reduced by 33 cents, the government revenue would decline by R$ 26 billion reals.

In addition to lower fuel prices, the truckers also want a higher minimum freight rates. The minimum freight rate was established after their last national strike in May of 2018, but the drivers contend that the rate is too low to make a decent living.

The President feels everyone would lose if a nationwide strike did occur especially in the middle of a pandemic and a struggling economy. The strike in May of 2018 lasted 10 days and it lowered the Brazilian GDP by 1.2%.

Some in the agricultural sector supported the last strike because lower diesel prices would benefit farmers as well. The Brazilian livestock producers did not support the strike because it cost them billions in lost revenues because they could not get feed for their livestock or transport their products such as live animals, perishable items, or milk.

Currently, the farming sector is against the proposed strike because they feel the prior effort to control diesel prices was ineffective and the minimum freight rates, which resulted from the last strike, negatively impacted their bottom line. A large association of transport companies in Mato Grosso has already indicated that they will not support the strike.

The director of the Pro Logistical Movement in Mato Grosso indicated that they feel the authorities, such as the Federal Highway Police, should not permit the striking truck drivers to block major highways and stop the movement of grain and other agricultural products. More importantly, they think the drivers would lose support from the Brazilian population should they stop the shipments of vaccines, medicines and even ambulances in the midst of a pandemic.