September 5, 2018 / 4:43 PM / 18 days ago

UPDATE 2-Brazil hikes freight rates 5 pct, lifting agriculture costs

(Adds trucker association comments)

By José Roberto Gomes and Roberto Samora

SAO PAULO, Sept 5 (Reuters) - Brazil’s transportation regulator on Wednesday raised minimum truck freight rates by 5 percent on average, as the government walks a tight line between the demands of the agriculture and trucking industries following a truckers’ strike in May.

Exporters group Anec criticized the higher rates for raising costs for the country’s grain sector by 3.4 billion reais ($818 million), while truckers association Abcam said the adjustment did not go far enough.

Brazil’s government agreed to institute minimum freight rates as part of a deal to end a truckers’ strike in late May that paralyzed roadways and held up deliveries including animal feed, industrial inputs and consumer products.

Abcam said in a statement that the new higher minimums did not do enough to meet the needs of freelance truckers, saying that the table of rates should do more to address different types of loads, number of axles and differences between states.

The increased rates, published in the official government gazette, vary by type of cargo and are effective immediately.

Abcam said it has no plans to go on strike again, but would seek a meeting with the office of the president’s chief of staff to voice its concerns.

On the other side, Sergio Mendes, director-general of grain exporters group Anec, said the higher rates would place even higher pressure on the low profit margins of the sector, where exporter margins already stand at about 1 percent.

“Margins are extremely narrow, anything additional you add cannot be passed on. You have to swallow the additional cost,” Mendes said in a phone interview.

Anec estimated the 3.4 billion reais cost to the grains sector for the 2018/19 crop season, based on the area of soy and corn planted in Brazil and a common shipping route from field to port.

Freight costs are seen rising to 236 reais per tonne of grain on average, up from 225 reais under the previous table of minimum rates, according to Anec.

Last week, state-owned oil company Petroleo Brasileiro SA (Petrobras) raised the price of diesel, the fuel used by most truckers, by 13 percent.

Industrial and farm lobbies have criticized the government for its decision to set minimum freight prices, saying it would raise their costs and final prices for consumers.

The powerful farm association CNA and several other groups have launched legal cases to challenge the validity of the law. ($1 = 4.1573 reais) (Reporting by Jose Roberto Gomes and Roberto Samora; Writing and additional reporting by Jake Spring; Editing by Rosalba O’Brien and Leslie Adler)

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