Brazil’s government is mulling reducing taxes on diesel to appease truckers and prevent a strike that could derail transportation of a record soybean harvest, according to a Bloomberg report.
Truckers in Latin America’s largest economy have been planning a strike for Feb. 1, and calls have gained steam over the past few days as state-run oil company Petrobras raised diesel prices. On Wednesday, Jan. 27, the National Confederation of Transport and Logistics Workers urged its 800,000 members to join the stoppage. In Sao Paulo, South America’s largest city, about 50 trucks planned to gather at a key bridge to call attention to the walkout.
“We recognize the value of truckers for our economy and we appeal to them to not go on strike as everybody will lose,” President Jair Bolsonaro told journalists in Brasilia on Wednesday.
Bolsonaro, who spoke about the potential tax cuts as he left the Economy Ministry for an off-schedule meeting, added that such a measure would not be easy to approve. The government is trying to lower spending after a multi-billion dollar stimulus package to boost the economy amid the pandemic.
While the size of the stoppage is unclear – truckers do not have a single representative and threaten to strike almost every year – Brazil is largely dependent on road transportation. In 2018, key highways connecting states were blocked, paralyzing the country in a matter of days, disrupting food, fuel, and other cargo transportation in major cities.
The timing could also be disastrous for the agriculture superpower, as soybeans are on the verge of being loaded through the nation’s ports. Brazil, the world’s largest exporter of soybeans, is starting to collect an all-time-high production in the coming weeks after record plantings by farmers encouraged by insatiable Chinese demand. A nationwide strike would prevent the oilseed from being shipped at ports at a time that similar movements have emerged in Argentina, also a key-exporter of soy products.
Soybean futures have jumped 18 percent since early December in Chicago on concerns that global supplies will be tight amid robust Chinese demand.