May 23, 2018 / 8:50 PM / a month ago

Brazil's agriculture sector bearing big brunt of fuel hikes -study

SAO PAULO, May 23 (Reuters) - Brazil’s agriculture sector is one of the hardest hit by a hike in diesel prices that has provoked a nationwide trucker strike, according to an analysis from a leading university released on Wednesday.

The University of Sao Paulo’s College of Agriculture (Esalq) said that as compared to early 2017, farmers are now paying up to 9.05 reais ($2.50) more per tonne to move grains from fields in Mato Grosso state to Latin America’s largest port at Santos.

Brazil is a key global supplier of grains, meat, coffee and sugar — most of which reach ports by road.

The Esalq study estimated that the cost to move agricultural goods in Brazil was about 120 billion reais last year, with transportation accounting for 87.5 percent of that figure.

The diesel hike is a tremendous blow to the sector when the sheer volume of products is considered, Esalq wrote. For instance, Brazil is expected to sell about 73 million tonnes of soybeans in export markets this season, according to projections by the United States Department of Agriculture (USDA).

Transport lobby CNT, which estimates that 60 percent of Brazil’s cargo is moved by truckers, called for a revision of the pricing policy of Brazil’s state-controlled oil firm Petroleo Brasileiro SA.

“Brazil’s diesel fuel is more expensive than in countries at a similar stage of development like Russia and Mexico,” CNT said in a Wednesday statement, adding that local prices are on average about 15 percent higher than in the United States.

Diesel fuel prices at the pump rose between 13 percent and 15 percent in the key agricultural and industrial states of Mato Grosso, São Paulo and Paraná between January 2017 and May 2018, Esalq said in its study.

The federal government and a group representing truck drivers met for talks Wednesday afternoon, but failed to make any progress on ending the protests snarling traffic nationwide .

The impasse continued despite Petrobras on Wednesday lowering diesel prices for a second time this week.

$1 = 3.6238 reais Reporting by Ana Mano Editing by Marguerita Choy

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