A Closer Look at Brazil's Infrastructure

Transportation is still Brazil's biggest agricultural challenge.

If you're renting a car to look at farmland in Brazil, get the full coverage insurance.

I simply didn't see the first enormous crater that gave us a flat and bent the wheel of the rental car. I admit that. But the second lost rim wasn't my fault. When it gets dark on highways in Mato Grosso state—Brazil's biggest soybean producer—it gets real dark.

The reporters traveling with me helped get the bent rim and wheel off in the pitch blackness, by feel, and to put on the little temporary spare under the carpet of the trunk. But there wasn't much time for a victory lap once we got rolling again, as an oncoming truck swerved fully into my lane to avoid a similar crater. I only managed to avoid a head-on collision by busting the spare in an even worse chasm in the asphalt, which made the rim of the spare into the shape of a letter C.

Good thing it was a rental.

That night came to mind after I got an email from an analyst in Shanghai, asking about transportation issues here in Brazil—a country where many semi trucks come complete with an air hose to each wheel tandem, and a compressor you can control from the cab.

Transportation, after all, is Brazil's big agricultural challenge. So much so that a recent study reportedly found that the average Brazilian soybean farmer loses nearly $1.40 a bushel, at the current exchange rate, just on transportation costs.

Though Brazil is geographically larger than the mainland United States, it's got less railroad track than even Argentina. The Amazon will take Panamax ships deep into the continent, but the tributaries that start fairly near ag production areas shrink and nearly disappear in the dry season.

And so most ag production gets to port by eighteen wheeler.

That's more expensive, of course, than transport by railway and waterway. And it's a lot more expensive when the roads are bad.

Which is one reason why Mato Grosso producers voted recently on establishing an institute, Pró Logística, to get the word out to policymakers on needs in the transportation sector.

"Our aim is to pressure the government in connection with highway conditions," says Glauber Silveira, the head of Mato Grosso's corn and soybean association, which, along with other state ag groups—such as cattlemen and cotton producers-- voted on the institute.

And now may be the time for the group to reach out to decision-makers. The federal government's Economic Acceleration Program, a $300 billon stimulus effort that spends public money, aims to build, repair or improve 27,000 miles of highway; improve 1,511 miles of railroad; and modernize 12 ports over the next four years.

All that effort could make it cheaper to get ag products out to the world, and inputs in to the farm. It will cost a good deal— but, over the long run, it ought to be less than those add-on rental car fees.

There are a number of port, rail and waterway projects underway right now. I'll fill you in on the latest from time to time. So stay tuned.

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