Content ID

45632

Infrastructure Holds Back Brazilian Farmers

Brazil is notorious for its poor rural, dirt roads that make transporting crops difficult, slow, and expensive. The Iowa Farm Bureau recently took a trip to Brazil. After countless hours on bumpy roads, a member of the tour group reports back that the situation is not improving.

“At first glance, the country’s infrastructure, specifically the highways, looks good,” says Stacy Timperley, export operations manager for Forbs Export Services. “Get into the back roads, and it’s a different story. It’s all sandy roads with no rock or concrete. With 50 inches of rainfall every year, one shower could wipe away the roads – and there is constant upkeep.”

There have been plans to asphalt the highway connecting the state of Mato Grosso, a major producer of soybeans and cattle, with the Port of Santarem for years, but it appears construction is at a halt.

“We saw the road they were trying to build from Mato Grosso to Santarem, and it looks like a ghost town,” explains Timperley. “Once Brazil changed political parties, the project came to a stop. There are some private companies trying to get involved and toll roads, but there is a high cost of upkeep and still a lot of issues on the political side.”

Infrastructure presents major roadblocks for ag
Without an easy way to get crops to a port, export costs are at a premium. “To get soybeans from Mato Grosso to a port costs farmers $2.40 a bushel,” says Timperley. “If you relate that to here in the U.S., it costs only 80¢ per bushel to take grain from Iowa down the Mississippi River to a port.”

With the lack of quality rural roads, Timperley wonders why there isn’t more of an emphasis on using the rail system. “They export less than 10% of soybeans via rail,” she explains. “They need to use their infrastructure better.”

Infrastructure is also an issue for the booming cattle industry in Brazil. “The higher quality beef is located in the southern part of Brazil, while the grain is grown in the middle of the country,” says Timperley. “So, cattle are trucked for 55 hours up to the feedlots. Because it takes so long and there are laws against having the cattle come out of the trailers, the cattle end up losing 100 pounds in transit. The feedlots are responsible for beefing them up and getting them to slaughter.”

Ramping up production
Despite the setbacks, Brazil has become one of the major players in producing soybeans, corn, and beef.

In the 2013/2014 marketing year, Brazil exported 45.2 million tons of soybeans (slightly behind the U.S.’s 54 million tons) and 21 million tons of corn, nearly one-fifth of the world’s corn exports.

The growth in the cattle industry is equally impressive. From 1990 to 2009, Brazil’s cattle inventory rose 33%. From 1999 to 2012, Brazil increased beef exports by a whopping 193%, pushing the U.S. to fourth place and making Brazil the bronze winner in terms of world beef exports.

Focus on research
The numbers may seem astounding when you picture trucks loaded with soybeans driving down sandy roads covered with axle-breaking potholes. While the lack of quality infrastructure may make the country appear to be lacking in modern technology, don’t be fooled. This is a country that is dedicating resources to improving its ag production.

In 2008, global public spending on agriculture R&D totaled $31.7 billion. This pie was split almost evenly between high-income countries and developing countries. Among the developing countries, Brazil ranked third in terms of R&D spending.

“They are very progressive in terms of technology,” adds Timperley. “They are experimenting with different ways to artificially inseminate and mix breeds. On one of the farms we visited, we saw a high-quality heifer that the farm had cloned.”

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