Brazil’s soybean farmers are hobbled by transport delays, and the country needs to spend heavily on improving its deficient network of ports and roads to better compete with the U.S., according to Soybean & Corn Advisor Inc.
Soaring freight rates have made Brazilian farmers hesitant to forward-contract crops as they don’t know what transport will cost, the Hinsdale, Illinois-based consulting company led by Michael Cordonnier wrote in a report on its website today.
Soybeans from Brazil take an average 52 days to arrive in China compared with 16 days for beans from the U.S., the consultant said, citing a study by Aprosoja, Mato Grosso’s soybean and corn growers association. That shows the “stark deficiency” of Brazilian infrastructure, the consultant said.
“Brazil’s main competition for export markets is the U.S.,” Soybean & Corn Advisor wrote. “With the infrastructure already in place in the U.S., Brazil needs to invest heavily in infrastructure in order to catch up.”
While spending on transport networks is rising, Brazil starts from a deficit compared to the U.S. and needs to do more to avoid falling further behind, Soybean & Corn Advisor said.
Brazil spends 1.7 percent of its gross domestic product on infrastructure, compared with 8.3 percent for China and 5.4 percent for Australia, Soybean & Corn Advisor wrote.
“Farmers are paid less for their grain to compensate for the cost associated with thousands of trucks lined up along highways waiting to unload soybeans at interior grain terminals and hundreds of vessels waiting up to two months to load grain at Brazil’s southern ports,” according to the report.
Farmers in Brazil have committed about 5 percent of anticipated grain production so far in May due to uncertainty about freight costs, while normally they would have forward-contracted about 30 percent at this time, Soybean & Corn Advisor said.
High freight rates also make seed, chemicals and fertilizer more costly, according to the report. Brazil imports 70 percent of its fertilizer via the country’s southern ports, and transporting the plant nutrients inland is “extremely expensive,” Soybean & Corn Advisor said.