Mar 04, 2016

Moving Grain North in Brazil could save US$ 47-60 Per Ton

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

Brazilian producers continue to lose potential profits due to the high cost of moving grain produced in central Brazil to ports in southern Brazil instead of moving the grain to the "Northern Arc" of ports in northern Brazil. The newspaper Gazeta do Povo reported that a study conducted by the Brazilian Ministry of Agriculture indicated that 60-70 million tons of grain produced in Brazil are transported by truck more than 1,000 kilometers in order to reach Brazil's southern ports.

If grain produced in central Brazil would be moved north to the Northern Arc of ports, there would be a savings of US$ 47 to US$ 60 per ton depending on the region where the grain is produced. Just in the state of Mato Grosso alone, if the grain moved north, producers in the state could save US$ 1.2 billion.

The National Agriculture and Livestock Confederation of Brazil (CAN) estimates that Brazil could be the world's largest exporter of grain by the year 2020 if the country would aggressively invest in improved railroads, barging, and highways. Progress is being made in moving grain north instead of south, but producers want the federal government to put a higher priority on these projects. Five years ago, approximately 8% of Brazil's grain exports moved through the Norther Arc of ports and that increased to 20% in 2015.

One of projects being pushed by the Brazilian Minister of Agriculture is improvements along the Tocantins River that would allow for year round barging operations. Agrolink is reporting that five companies have registered to bid on a dredging project to improve barging operations on the river. The project involves removing rocks along a 43 kilometer stretch of the river that prohibits barging during the months of September-October-November when the river is at its lowest. The 58-month project is expected to cost over R$ 500 million and it would result in a 140 meter wide channel that would be navigable year round.

Once completed, it would increase grain and mineral exports from central Brazil to the Port of Vila do Conde near the mouth of the Amazon River. This would be especially important for producers in the state of Tocantins. It is estimated that the river could transport 20 million tons of cargo by the year 2015.