Brazil Trucker Strike Worsens As Petrobras Workers Plan Walkout

Brazil's crippling trucker strike entered its eight day on Monday, affecting virtually all aspects of the country's economy as vital resources have been unable to reach their destinations. 

The protests, triggered by a 50% spike in fuel prices over the last year, resulted in the declaration of a state of emergency across most major cities as shelves run bare and vital supplies dwindle. Airports have reported running out of fuel, hospitals are running out of supplies, and public transport and trash collection have been reduced or halted across the country. Some food prices have also spiked as supplies dwindle. As we noted on Friday, a lack of livestock feed threatens a billion chickens and 20 million pigs who may starve to death.

Now, after deploying the military to physically unblock roads and several last-ditch measures to seek a resolution Sunday night, President Michel Temer has a new problem on his hands; Petrobras workers are about to go on strike starting May 30demanding that the company fire CEO Pedro Parente and permanently lower fuel prices. The company said on Friday that they have no plans to remove Parente. 

Petrobas attempted to calm the striking truckers last week by lowering the price of diesel by 10% for two weeks, a move which did not impress the truckers. Shares of Petrobras have dropped 35% since May 16

Minor progress in the strike was achieved over the weekend, as most of the nationwide roadblocks were at least partially opened, allowing passenger cars to pass freely. The governor of Brazil's most populous state of Sao Paulo also negotiated a deal Saturday night with truckers' representatives to remove the roadblocks until Tuesday, while also guaranteeing provisions for essential services. 

Police escorts helped tanker trucks reach key fuel depots and gas stations after some people chose to sleep in their cars, sometimes waiting more than 12 hours in line for fuel. While delivery of essential medical supplies is improving, supermarkets still face shortages of perishables such as fruit, vegetables and eggs. The meat producers association ABPA said poultry growers have lost 64 million chickens. Brazil is the world’s largest poultry exporter. -Bloomberg

That said, the road openings and delivery of vital supplies appear to be nothing more than band-aids, which include a Sunday night cut in the price of diesel.

Mr Temer said the diesel price cut would be valid for two months, after which there would be price adjustments only every month rather than on a daily basis. “This way the truck driver can better plan his costs and the value of his freight,” the president said. -FT

Throughout this week, my government has always been open to dialogue,” said President Temer during a brief announcement on national television, conceding a cut of R$0.46 per litre, or an average of about 12 per cent. 

Meanwhile, one billion chickens and 20 million pigs continue to be at risk of starvation, as feed supplies are still unable to reach farms according to Brazilian export group ABPA. A leader from ABPA reportedly met with the Temer administration late Sunday, according to Bloomberg.

ABPA said that over 150 poultry and pork processing plants had indefinitely suspended production, while Brazil's sugar industry - the world's largest - is slowly halting cane harvest operations as their machines run out of fuel. 

The drivers, many of them owners of their own vehicles, have organised themselves through WhatsApp groups and social media and are fiercely opposed to a government they see as corrupt and rapacious. Many of them are calling for a military “intervention” or coup to take over the government. 

This revolt by the truckers is the embryo of a tax rebellion,” said Brazilian economist Eduardo Giannetti, who is also an advisor to one of the candidates in Brazil’s October elections, environmentalist Marina Silva. Speaking in an interview with Folha de S.Paulo newspaper, he said like the American Revolution, tax rebellions began when “the population no longer accepts the legitimacy of the government to tax it. -FT

Other measures offered by the Temer government to ease the situation include special concessions at toll booths, legislation to establish minimum freight pricing and a guaranteed share of government-contracted commodity deliveries.