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Inside Look at Brazilian Ag: Part Four

South American Crop Watch

Going South to Go North: Brazilian logistics are changing

Published on: February 5, 2013

I'm on tour in Brazil with Farm Futures this week and I wanted to give you a preview of our cover story on Brazil, hitting mailboxes later this week. But first, here's a crop update: rains are slowing up the harvest of the earliest beans in much of Mato Grosso, after the season's first beans were brought in. Rust outbreaks are increasing, and one Mato Grosso Ag leader said yields are going to come down a bit as a result. More rain was in the forecast.

Despite such concerns, 2012-13 soybean crop size estimates keep climbing, with one consultancy putting this season's Brazilian bean production as high as 84 million tonnes.

Cover story: Going south to go north

I'm planning a trip home to the States soon, and I'm going on a relatively new route. I'll fly up to Manaus, a city with an international airport just about in the middle of the Amazon Rainforest. And, from there, it's on up to Chicago. I like the route because it goes basically due North. No need to fly South for an hour or two in order to fly out of the international airport in Rio de Janeiro or São Paulo.

Likewise, new and more northerly exit points have been opening up for Brazilian soybean exports. After all, soybean production has marched north in Brazil since researchers here learned how to trick beans into thriving in the length-of-day conditions of the Tropics.

"The agricultural areas located above the 15th Parallel, which. in 2001, answered for just 32 percent of national soybean and corn production, now harvest 52 percent of the nation's total," writes Brazilian Senator Kátia Abreu, who moonlights as head of the National Agriculture Confederation. And, she adds, "during that period, national grain production increased 65%."

But 84% of all Brazilian grain exports still head to one of the southern ports before heading back North on a ship—to Europe or west through the Panama Canal. And the distance from a place like Sinop—one of those Mato Grosso areas where farmers are looking anxiously up at the dark clouds in the sky this week—is at least 1,200 miles, much of it on roads so poor that they look as though they're in a war zone.

Over the road

No rivers can now be used to make the trip. And, though there is a rail line, the head of one commodity transportation group here told me that, while the presence of the rail line probably helps reduce costs a bit, the rail line charges as much as it can, just under the cost of putting the beans on an eighteen-wheeler for the trip to Santos Port.

What's needed for Brazilians soybeans is a northern exit point like the one I'm using for my trip home to the States. In this month's Farm Futures, I take an in-depth look at Brazilian efforts to do just that—cut transportation costs so as to get their beans into buyers' hands at less cost. Watch for it in your mailbox.