Brazilian agribusiness was hit by the truckers' strike. Photo: ANPr
Brazilian agribusiness

Brazilian agribusiness was hit by the truckers’ strike. Photo: ANPr

The Brazilian agribusiness industry was one of the worst-affected by the 10-day truckers’ strike which ended last week. Animal breeders, who depend on deliveries of food, saw many of their animals die of starvation and cannibalism. Meanwhile, vegetable and fruit producers were forced to discard a big chunk of their production – which couldn’t make it to food distribution centers due to road blockades.

During the strike, food shortages were seen across the country – even though big urban centers managed to receive food from nearby rural properties. In the countryside, producers couldn’t manage to make deliveries owing to a lack of fuel. While some producers didn’t have supplies, others were unable to do anything with their production.

The recovery time for each sector will vary. In this post, The Brazilian Report will assess the initial losses to Brazilian agribusiness, based on a study by the Institute for Applied Economic Research (Ipea).

Dairy farmers

Farmers depend on a clockwork routine, milking their cows up to three times a day and storing their product in refrigeration tanks for up to two days. Pickup and distribution are done exclusively by trucks. In other words, any disturbance affects the sector directly. According to the Brazilian Agricultural Confederation (CNA), most dairy companies completely shut down their production for five full days – forcing them to throw away 280 million liters of milk, worth over BRL 360 million (USD 94.5 million).

Most producers, without any forecast of when their production would get back to normal, cut down food provisions for their cows. That measure was aimed at cutting costs and diminishing milk production by up to one-third. However, these producers will not have a harder time returning to pre-strike production levels. It should take from one to two months until the average milk production per cow is back to normal.

Poultry and pork

According to the Brazilian animal protein association, 64 million chickens died of starvation during the strike, resulting in a loss of BRL 3 billion. That number also takes into account the costs of removing the dead animals from production facilities. Producers say that they don’t usually stockpile large quantities of animal food, getting their supplies every three to five days.

Until the strike, poultry prices in Brazil had gone down by 20 percent over the year’s first four months. After the 10-day strike, however, prices at markets rose by 30 percent, more than recovering from the downward trend. But prices are expected to lower again as production gets back to normal levels.

Exports took a USD 350 million hit, as 120,000 tons of poultry and pork were not shipped as they should have been.

Fruits and vegetables

Data from the Brazilian fruit exporters association shows industry losses of over BRL 920 million due to the strike. In the São Francisco valley (which encompasses areas from the states of Minas Gerais, Bahia, Pernambuco, Sergipe, and Alagoas) alone, losses amount to BRL 570 million. This sector depends on fresh products, which explains the size of the losses.

The worst-affected fruits were papaya, mango, grapes, guava, and acerola. Besides the financial losses due to the non-commercialization of the fruits, CNA, the Brazilian agribusiness representative, estimates that more losses might come in the mid-to-long term, due to the inadequate disposal of the production.

Fruit flies thrive when there’s an accumulation of ripe fruits – which is exactly what happened when producers threw their production away without giving too much thought about how it should be handled. Fruit flies have a 21-day cycle, which means that more losses could come.

Beef

The truckers’ strike erupted right before the dry season in beef-producing regions. That’s precisely the moment when cattle breeders start sending their animals to slaughterhouses. However, most of these were shut down without supplies or fuel. But while cows won’t die as quickly as chickens, keeping cattle around for longer than planned can be expensive for producers.

Not to mention the 40,000 tons – or USD 170 million – that weren’t exported.

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MoneyJun 06, 2018

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BY Gustavo Ribeiro

An award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.