Port Complex in Brazil Opens New Grain Export Route

Combine harvester pours soybeans in a truck in Campo Novo do Parecis, Mato Grosso, Brazil on March 27, 2012.(YASUYOSHI CHIBA/AFP/GettyImages)

Summary

On April 25, Brazilian President Dilma Rousseff traveled to the northeastern city of Barcarena in Para state to attend the opening ceremony of the Miritituba-Barcarena port complex. Built by Bunge, an agribusiness and food processing company incorporated in Bermuda but based in New York, the $320 million complex has two terminals -- one in Miritituba on the Tapajos River and the other at the Port of Vila do Conde in Barcarena on the Para River. The terminals will handle grain shipments from Brazil's landlocked state of Mato Grosso and ease pressure on Brazil's overloaded Santos and Paranagua ports in the southeast. The project is just one component of Brazil's broader push to open up the "northern exit" for grain shipments to Europe and Asia via the Atlantic Ocean.

Analysis

To reach Barcarena, Mato Grosso's grain will first travel 965 kilometers (600 miles) by truck from the interior along highway BR-163 to Miritituba. There, the shipments will be offloaded onto barges and taken down the Tapajos River, which runs through the Amazon rain forest. Although highway BR-163 is in disrepair, the new route will cut transportation time by 20 percent and reduce costs substantially.

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Mato Grosso, which means "thick bushes," is the third-largest Brazilian state by territory. For most of its history, the state was not conducive to economic development. Located between the Amazon rain forest and a major wetland, the Pantanal, most Brazilians considered Mato Grosso a place to visit but not somewhere to settle or make a living. Farmers considered the hilly savannas of the Cerrado region, of which Mato Grosso is a part, to be unsuitable for agriculture.

But in the 1950s, President Getulio Vargas rallied the nation for the "Marcha para o Oeste," or "March to the West," offering farmers cheap land as an incentive to settle in Mato Grosso. Between the 1950s and the 1990s, small-scale farmers from the south flocked to the area, making it one of Brazil's fastest growing states. Agricultural research and advances in cultivation techniques transformed it into the country's top grain producer. In 2013 it produced 46 million tons of grain, 24 percent of Brazil's total production. Much of this consisted of soybeans, but it also exported a significant amount of corn, as well as meat and fish.

In spite of this explosive growth, poor infrastructure continues to present barriers to bringing the state's produce to market. Today 70 percent of Mato Grosso's grain production travels the nearly 2,000 kilometers (1,200 miles) by truck to the ports of Santos and Paranagua in the southeastern states of Sao Paulo and Parana. These ports now operate at the limits of their capacity, also handling agricultural exports from the south and southeast.

To overcome this constraint, the Brazilian government has partnered with private sector companies, including Bunge, Brazil-based waterways transportation firms Hidrovias do Brasil and Cianport, and U.S.-based food and financial company Cargill. Together they will invest upwards of $2 billion over the next four to five years to upgrade highway BR-163 and construct more ports in the Amazon basin. The partners hope to export 20 million tons of grain along this route in the next year, taking a substantial amount of pressure off the southeast.

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