Aug 26, 2010
Mato Grosso Has Highest Transportation Costs in Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Approximately 70% of the grain produced in Mato Grosso moves to the ports by truck, making the state the most expensive location in Brazil to grow soybeans. A lack of alternative modes of transportation has frustrated Mato Grosso soybean farmers ever since soybean production started in the state. According to the National Association of Cereal Exporters (Anec), the average cost of moving a ton of soybeans from the state to the ports is R$ 230 per ton or US$ 130 per ton. The cost of moving a ton of grain from the neighboring state of Mato Grosso do Sul to the port is R$ 115 per tons and from the state of Sao Paulo it is just R$ 67 per ton.
The three reasons why it is so expensive to transport soybeans out of the state include: distance to the ports, the price of diesel fuel, and the lack of alternative modes of transportation. The principal ports for Mato Grosso's soybeans are Paranagua and Sao Francisco do Sul in the state of Parana, Santos in the state of Sao Paulo, and Vitoria in the state of Espirito Santo. The distance from Sorriso in central Mato Grosso to the port of Santos is 2,100 kilometers, to the port of Paranagua is 2,200 kilometers, and to the port of Vitoria is 2,500 kilometers. The distance from Sorriso to Vitoria is about the same as between Minneapolis and Miami.
Another reason why it is so expensive is the fact that Mato Grosso has the third highest diesel fuel costs in all of Brazil. Diesel fuel accounts for approximately 50% of the cost of transporting grain and the diesel fuel in Mato Grosso is at least 10% more expensive than in other grain producing regions of Brazil. Diesel fuel in Mato Grosso costs an average of R$ 2.21 per liter or US$ 4.80 a gallon. Only in the states of Roraima in far northern Brazil and Acre in far western Brazil is diesel fuel more expensive.
The number of transport companies in Mato Grosso has also declined 15% over the last two years reducing competition. The poor condition of the roads and the high cost of operations are forcing the least efficient operators out of business. During the last two years, the number of transport companies in the state has fallen from 935 to 796.
The third, and maybe the most important reason as to why transportation is so expensive in Mato Grosso, is the lack of alternative modes of transportation. Some of the soybeans produced in Mato Grosso move by rail to the ports and an even smaller percentage moves by barge. Additional rail line may be built, but funding for these projects is not certain.
There are two proposed barging operations on the drawing board that would carry soybeans from northern Mato Grosso to the Amazon River, but no funding for the projects has been allocated. The two proposed river routes would involve the Teles Pires/Tapajos Rivers and the Tocantins/Araguaia Rivers. Both of these routes would significantly cut the cost of transporting soybeans produced in northern Mato Grosso.