Jun 28, 2016

Brazil Ranks 123rd out of 140 Countries in Transport Infrastructure

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

The lack of adequate infrastructure in Brazil is a continuing concern for the agricultural sector. That concern was reinforced by a recent study released by the World Bank. According to the study, the biggest obstacle facing the Brazilian agricultural sector is inadequate infrastructure and the lack of a serious attempt by the country's politicians to address the problem.

In the 2015/16 Global Economic Forum (WEF) study released by the World Bank, Brazil is in 123rd position of 140 countries when it comes to transportation infrastructure and ports. This is critical for Brazil since approximately 60% of Brazil's grain production is transported by truck and only 13.5% of the roads in the country are asphalted.

This inadequate infrastructure can lead to a lack of competiveness and uncertainties since a cargo of grain could be interrupted at any point along the way or at any time by a breakdown of the transportation network.

Brazil has made slow progress in improving its antiquated infrastructure, but it has barely kept pace with the expanding production. Additionally, the agricultural expansion is occurring in areas where the lack of infrastructure is the most acute.

Concerning the highway network in Brazil, the federal government decided that in order to get an infusion of investments, most major highways in Brazil would be turned into toll roads operated by private companies. Farmers strenuously objected to this plan because they realized that they would end paying the tolls to transport grain in the form of lower grain prices. When the entire toll road system in Brazil is in place, the toll charges on a bushel of soybeans produced in Mato Grosso and exported through the Port of Paranagua in southern Brazil will be as high as $1.00 per bushel.