Brazil Sets Sights on Northern Ports

South American rail infrastructure set for improvements

Brazil harvest update: The most recent report on the 24 million-ton Mato Grosso soybean harvest indicates 17% of the state crop is in, versus 24% for the same week of last year. Heavy and constant rains in some parts of the state have hurt quality and yield, with some beans sprouting right in the pods. That said, a government agency issued a revised national 2012-13 crop estimate recently, of 83.4 million tons.

When Brazil sets out on a project, it's usually on an epic scale.

Take its effort, starting in the 1970s, to break the country's dependence on imported petroleum. Back then, when a number of Arab countries jacked up petroleum prices, the South American country's military rulers mandated that every filling station nationwide have a neat ethanol pump, and it dived into a crash program to substitute imported gasoline with sugarcane ethanol.

Thus, virtually overnight, Brazil became an alternative fuels powerhouse.

So it is with Brazilian rail. After all, the idea of a railway connecting the country's vast cerrados with population centers on the Coast was first proposed in 1901, long before soybeans became the driver of agricultural expansion across the nation's vast inland scrub.

Some 74 years later—just before that scrubland began to get replaced with soybean fields-- Mato Grosso Congressman Vicente Vuolo submitted a bill that would put the project into action. It took another 14 years for the first contract for a railway concession on what would become the soybean railroad to be signed.

Today, the Vicente Vuolo Railway, connecting Brazil's top soybean state with its top soybean-exporting port, is a reality.

But though the timing of Brazil's ethanol effort may have been just about perfect, it looks more and more like the Vicente Vuolo Railway is already a bit behind the times. After all, the railroad goes South, toward population centers in Brazil. But the new idea is to skip Brazil's population centers altogether and go North to export.

After all, sailing at ten knots, it takes 22 days for a ship laden with beans to get from the Santos Port, where the Vicente Vuolo Railway delivers beans, to the Panama Canal. But if you could ship the beans out of a northern port, like, say, Itaqui, you can cut ten days off the trip (see Farm Futures Feb. 2013 cover story for more on this topic).

North-South railway

So a newer route is under construction, called, rather conventionally, the North-South Railway. Running down the spine of Brazil, the railway will hook a land of vast cattle pastures to a deep-water port on the northern end of Brazil where work is apace to finish expanding a 2.5 million-ton grain terminal to 15 million tons by 2020.

Even the old Vicente Vuolo could be headed toward a northern port—in this case, an Amazon River port—soon. 

Some forty-odd years after Senator Vuolo got the go-ahead for his railway, a group of Chinese businessmen and engineers sat down with Mato Grosso state officials to talk about Chinese construction of a railway that would take the place of the quagmire roads between fields in Mato Grosso and the Amazon port in Santarém.

There are a few thorny issues to settle before that comes close to happening—native reservations stand in the way, and so does the Amazon Rainforest, which most are eager to keep in its pristine state. But the extension of the Vicente Vuolo Railway from Mato Grosso's state capital on up to an Amazon port—at an estimated cost of $4.8 billion, for something like 1,400 miles of track, would surely cut those truck transportation costs from northern Mato Grosso to southern ports.

Building railways to get agricultural products out cheaper is a sea change, of course, in Brazil's effort to compete even more ardently as a world agricultural supplier. But the notion itself of shipping from the North—closer to Europe and the Panama Canal—is a slow-moving but epic change.

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