SAO PAULO, May 28 (Reuters) - Brazilian sugar mills and sugarcane suppliers in São Paulo state are expected to halt production due to protests by truckers against high fuel prices that have blocked major highways across the country.
Sugarcane industry group UNICA predicted on Monday that all mills in the key sugar production state of São Paulo would grind to a halt in 24 hours because the effects of the truckers’ protest were continuing, even though a truckers’ association said that it had told drivers to return to work.
The government agreed on Sunday to cut taxes and offer subsidies to reduce diesel prices at the pump.
The situation will affect São Paulo’s 150 mills and 14,000 sugarcane suppliers, UNICA said. About 60 percent of Brazil’s ethanol and sugar is produced in the state.
“The scenario is worrying,” UNICA said in a statement, noting that mills will face a rise in costs as a result of the stoppage. It estimates the stalled businesses will lose a total 180 million reais ($48 million) in sales per day.
Overall, Brazil’s center-south, the world’s largest sugarcane belt, will reduce crushing by 25 percent, or 10.9 million tonnes, in the second half of May, consultancy INTL FCStone said on Monday, because of the effects of the truckers’ protests.
The number of mills halted in Brazil’s center-south, which includes São Paulo, could rise from 220 on Monday to 340 by Thursday if the protests continue, said trade group Fórum Nacional Sucroenergético.
The situation adds to the woes of domestic biofuel and sugar companies that in recent years have grappled with high debt, highly-regulated fuel markets and lower prices.
The truck protest caused gas stations and airports to run out of fuel, while supermarket shelves went bare and hospitals said they were running out of supplies. Companies and farmers in Brazil, a major exporter of staple commodities like sugar, soy and meat, were also unable to deliver goods to ports for export due to the road blocks.
UNICA also said some mills had their sugarcane fields set on fire during the protests. The mills were targeted after trying to deliver ethanol to guarantee minimum supplies to the population, UNICA said.
“The fires will mean an additional loss of revenue,” UNICA said. ($1 = 3.7319 reais) (Reporting by José Roberto Gomes Writing by Ana Mano, Editing by Rosalba O’Brien)