January 8, 2004

ADM Signs Soy Transport Deal With Ferronorte

Brazilian railroad operator Ferronorte will export 18 million metric tons of cargo, principally soy, over the next 10 years for U.S. grain processor Archer Daniels Midland.

Under the contract, Ferronorte will transport cargoes between Araguaia, Alto Taquari and Chapadao do Sul, its terminals in the top-soy-producing center-west region, and the port of Santos, South America's largest.

The rail link, which is controlled by Brasil Ferrovias and is currently struggling under the weight of heavy debts, has been key to the expansion of soybean production in the center-west states of Mato Grosso, Brazil's No. 1 producer, and Mato Grosso do Sul in recent years.

As a result of this expansion, Brazil is expected to take over from the U.S. as the world's largest exporter of soybeans in 2004. The coming 2003-04 crop will yield 60 million metric tons, up from 52 million last year, according to the U.S. Department of Agriculture.

Ferronorte said the deal reflects the competitiveness of the logistics offered by the company and market confidence that it will be able to restructure its debts. Ferronorte transported 5.5 million tons of soy and soy products to port for export in 2003 and expects this figure to rise 30% in 2004.