January 9, 2004

Brazil To Improve Infrastructure To Facilitate Soy, Grain Transport

Brazil will invest 200 million Brazilian real ($1= BRL2.85) in the country's transportation infrastructure to alleviate hold ups during the transport of Brazil's record 2003-04 soybean and grain crop.

Brazil's soybean production has expanded massively over the last five years, possibly reaching 60 million tons this year, but investments in logistics have not kept pace.

The Transport Ministry promised to invest the money in filling holes and re-covering federal highways over the next four months in an attempt to smooth the logistics of the next crop, which will start reaching the market in February, said an Agriculture Ministry press release.

"There will not be holes in the principle Brazilian roads, over which 90% of the grains crop is transported," said Luis Carlos Guedes Pinto, president of the Agriculture Ministry's National Commodities Supply Corp., or Conab.

However, the investment may not be sufficient. Earlier in the year, Carlo Lovatelli, president of the Brazilian Agribusiness Association, or ABAG, estimated investment of $2 billion to $3 billion is needed to resolve the immediate problems, such as the deterioration of the roads, the lack of storage and problems at the ports, and prevent a logistics breakdown.

Lovatelli said it is taking 40% longer for trucks carrying soybeans to travel from farm to port compared with three to four years ago because of the terrible state of federal highways and increased traffic.

Currently around 60% of Brazil's soybean exports are sent by road while the equivalent is sent, much more cheaply, by river in the U.S.

Brazil is set to become the world's leading soybean exporter in 2004 from an expected record crop of 60 million metric tons.