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Worldcrunch

Weak Infrastructure, Strikes And Spotty Logistics Choke Brazil's Agriculture Boom

Article illustrative image Partner logo Soyabean harvest in Brasil

SAO PAULO – While the U.S is suffering the worst drought in decades; Brazil is expecting a record-breaking grain harvest this year. But is the country’s infrastructure up to the task? 

Good prices for raw materials means Brazilians will be planting more soybeans and hiking their investments on technology, which will contribute to an unprecedented production, weather-permitting.

But age-old problems in infrastructure, which are even worse this year, may spoil the party.

Federal public employees’ strikes this month and truck drivers’ strikes last month may have a prolonged effect on the transport of the next soy harvest. In Lucas do Rio Verde in the Mato Grosso state, west of Brazil, tons of corn are stored outdoors and waiting for transport to the ports and consumption centers.

Lack of silos to store grain threatens the harvest, which is subjected to external influences such as the climate. This is not a new problem, but has grown worse this year. Corn production exceeded expectations, but strikes in sanitary vigilance and revenue service departments—on top of the truck drivers’ strike—has complicated the situation.

Logistical concerns

The limit for Brazil to export corn is the beginning of 2013, when the soybean harvest starts. “It the country does not sell all this corn quickly, the situation will become problematic”, says Daniele Siqueira, an analyst at the AgRural crop forecasters.

It will be a huge challenge to move this record harvest, according to the Brazilian Association of Vegetable Oil Industries (Abiove), who asked the government for extra credit to install new warehouses.

However, crop storage is just the part of the problem. Poorly kept roads, lack of alternative transportation, limited port capacity and new labor laws on truck drivers are just as concerning.

The problem is worse in areas far from the coast. "We are producing more and more, but infrastructure does not follow. Soon we will have serious logistical problems,” says producer Gilmar Dell Osbell, from Bom Jesus do Araguaia in the Mato Grosso state, whose soybean production should increase by 55 percent this year.

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