Dec 29, 2014
"Grains North" receives funding from Brazil's Development Bank
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazil's farmers and exporters have long complained about the high cost of transporting grain from central Brazil to ports in southern Brazil. The slow development of rail transportation in Brazil has led many to look north to barging operations on the Amazon River as the better solution to the high costs of transporting their grain to export markets.
Work is already underway on developing barging operations originating on the Tapajos River (a southern tributary to the Amazon River) and extending to the mouth of the Amazon River near the city of Belem.
The National Development Bank (Bndes) recently approved a R$ 404 million loan to Hidrovias do Brasil Vila do Conde S.A. for the construction of a private grain export terminal at the port of Vila do Conde at the city of Barcarena, Para. The export terminal will be located right next door to the big city of Belem, which sits at the mouth of the Amazon River.
The new export terminal is an integral part of the bigger project called "Grains North" which is designed to expand Brazil's grain exports by using the Amazon River instead of the traditional ports in southern Brazil. Three companies have joined together in the project including: Hidrovias do Brasil Vila do Conde S.A., Hidrovias do Brazil Miritituba S.A., and Hidrovias do Brasil Navegacao Norte Ltda.
These three companies were formed to develop the barging operations along the Amazon River instead of sending the grain to the traditional export facilities at the ports of Santos and Paranagua. This new route is expected to reduce transportation costs by as much as 40%. When the entire system is in place and operating at capacity, it is estimated that as much as 20 million tons of soybeans and corn could be exported annually along this northern route.
Most of the grain would originate in the state of Mato Grosso and be trucked north along highway BR-163 to the start of the barging operations at the city of Itaituba located on the Tapajos River. There are currently seven grain companies constructing barging operations at this site with the Bunge facilities already up and operating. The highway is currently being asphalted and it is expected to be completed all the way to city of Santarem located on the Amazon River sometime in 2016.
Even though this route will still involve the trucking of soybeans, the distances the trucks need to go north which varies from 900 to 1500 kilometers is significantly shorter than going to the southern ports which varies from 1500 to 2000 kilometers. The ultimate goal is to construct a railroad from central Mato Grosso to the Amazon River, but that will be many years in the future. It is estimated that 2 million tons of grain will be barged along this new route this growing season and that is expected to double every year for the next 3-4 years.