THE GROWING freight crisis in Brazil may lead to farmers defaulting on contracts according to leading international market commentator AgriCensus.
Last week, under intense political pressure, the Brazilian lower house of government approved a bill to impose minimum freight costs.
Truck drivers had been protesting for months over what they saw as below average payment, leading to grain transport chaos.
The grain export industry is fiercely opposed to the government move, saying it will push export costs up.
With the safrinha (second corn) crop yet to be fully harvested, the freight issues are causing havoc given much of the nation’s storage is full with soybeans.
There have been reports that due to the low corn price and high freight price farmers may default on contracts, at least until the freight crisis is solved.
With the Brazilian shipping stem heavily booked to export corn these issues will be sending a shudder up the spine of corn exporters.
The government passed the temporary bill in response to an 11-day truck strike.
The strike impacted far more than those directly involved in agriculture, with food and fuel supplies across the vast South American nation disrupted.