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Transportation and Logistics in Brazilian Agriculture

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Focus Region:
Latin America & the Caribbean
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Type of Risk:
Logistical & infrastructural
Type of Risk Managment Option:
Risk assessment
José Vicente Caixeta-Filho

Transportation infrastructure can determine the competitive success of an agricultural enterprises or entire agricultural sector. The Brazilian Government has proposed investment in large projects  to improve thetransportation infrastructure of the country’s Center-West and North regions. These projects intend explicitly to develop the commodity delivery system in those regions, which should stimulate the expansion of soybean cultivation into northern areas. The highway freight market is not under government control, meaning that freight prices are formed through free negotiation determined by supply and demand for the transport service. Carriers have to stay current on changes in every shipping cost variable to negotiate efficiently with shippers. These demanders, except under certain very specific circumstances, have the negotiation power to exert strong pressure on carriers to obtain freight transport discounts. The new deregulated railway system shows good potential, especially for the shipment of grains. Transportation using waterway systems, considered to be the most economical one for bulk volumes, has generated a lot of expectations due to projects such as the Madeira waterway system. It is hoped that this waterway system will efficiently reduce the transportation costs for grains produced in Brazil’s Center-West region. The ports of Santos and Paranaguá are still the preferred embarkation points, but the ports of Itaqui, Vitoria, Ilhéus, São Francisco do Sul and Rio Grande can be considered very good alternatives. The present and future Brazilian transportation system, in particular the location of and access to efficient transportation corridors, has been a crucial variable in the determination of processing plant location by private investors.