Dec 03, 2013

Completion for Brazil's "Soybean Highway" Pushed back Again

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

The Brazilian federal highway BR-163 traverses north and south across the state of Mato Grosso and is the principal highway that carries soybeans from the state to ports in southern Brazil. Due to its role in transporting this all-important crop, it has been sometimes called Brazil's "Soybean Highway".

The federal government is currently in the process of asphalting this highway northward from the state of Mato Grosso to the Amazon River port city of Santarem. The goal of this project is to reduce the cost of transporting soybeans to port facilities in Brazil by reducing the distance by approximately 1,000 kilometers compared to sending soybeans to ports in southern Brazil. For decades, the northern stretch of this highway has been an unimproved earthen road through the Amazon rain forest which was impassable during the rainy season and dust chocked in the dry season.

Recently a group of farmers and technicians from the Soybean and Corn Producers Association of Mato Grosso (Aprosoja) completed a trip from Mato Grosso to the Amazon River inspecting the progress of the construction. They found that approximately 30% of the 1005 kilometers within the state of Para have not yet been asphalted.

Part of the unfinished road is in relatively good conditions, but numerous bridges still need to be constructed. Other sections of the unfinished highway remain essentially untouched and nearly impassable. The worst sections of the highway were the responsibility of construction companies that have since declared bankruptcy and are tied up in the court system.

The estimated completion date for the highway has now been pushed back for the third time to sometimes in 2015.

Farmers in the state have been pushing for this highway and other infrastructure projects such as railroads and barging operations as a way to reduce their transportation costs which are approximately three times higher than in the U.S., which is Brazil main competitor in the world market. Brazilian farmers are concerned that their margins will be squeezed by these high costs especially if commodity prices decline.