Jan 02, 2019

Tolls Represent Significant portion of Transportation Costs in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

As we have reported many times in the past, part of the high cost of transportation in Brazil is due to most of the major highways in Brazil being converted into toll roads. The Organization of Cooperatives in Parana (Ocepar) released an "eye popping" study last week concerning the cost of tolls just inside the state of Parana.

A dual-trailer truck carrying soybeans from the city of Foz do Iguacu, which is the western-most part of Parana, to the Port of Paranagua in the eastern-most part of the state (a distance of 733 kilometers or 455 miles) would pay R$ 977.60 in tolls (approximately $250). If the truck carried 1,000 bushels of soybeans for example, the toll would be $0.25 per bushel. The tolls alone represent approximately 45% of the total transportation cost.

Even from areas closer to the port such as the city of Ponta Grossa (a distance of 214 kilometers or 132 miles), the tolls represent 20% of the total transportation costs. Looking at it in another way, the tolls would represent 8.3% of the variable cost of production for corn in western Parana and 4.9% of the variable cost of production for soybeans in western Parana.

That is the situation in Parana, it is worse for farmers in Mato Grosso which is much further from the ports in southeastern Brazil. From central Mato Grosso to the Port of Paranagua, which can be more than 2,000 kilometers (1,245 miles) depending on your starting point, the tolls alone can be as much as $0.90 per bushel. To put it into perspective, that is about the same as paying tolls from Des Moines, Iowa to Orlando, Florida.

Farmers of course, ultimately pay the tolls in the form of lower prices offered by the grain companies. There is universal agreement in Brazil that everyone wants better highways, but as all the major highways were being converted to toll roads, farmers complained bitterly that they are already paying for the highways in the form of taxes and now they have to pay even more in the form of tolls as well.