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Infrastructure Matters

Brazil's lagging transportation infrastructure is a major hurdle the South American nation faces in becoming a world-class ag competitior.

Imagine an agricultural area the size of Texas crisscrossed by only two major highways. Now, imagine the challenges that region's farmers face as they aspire to become a global breadbasket.

Today, those images come alive in Brazil's second-largest state, Mato Grosso. But, the state's remarkable success in boosting its agricultural production is colliding head-on with Brazil's lagging transportation infrastructure.

Until the mid 1970s, Mato Grosso had virtually no commercial crop or cattle production. Hard work (see sidebar on page 62) and technological advancements have since allowed farmers in this sub-Amazon state to create 12 million soybean acres, 2 million corn acres, 1 million rice acres and 750,000 acres of cotton.

At just over 18 million head, the state has also developed Brazil's second-largest cattle herd. In neighboring Mato Grosso do Sul, there are 20 million head of cattle.

They Don't Waste Asphalt

Soybean and cattle farmer Chris Ward, Rondonópolis, Mato Grosso, knows better than anyone how this sprawling west-central state is outstripping the ability to move its ag commodities into either domestic or international markets.

From Ward's farm in southeastern Mato Grosso, it's nearly 1,000 highway miles to Brazil's South Atlantic seaports. For most of the trip, trucks must negotiate crowded, narrow, pothole-riddled highways.

“We don't waste asphalt on road shoulders, do we?” he asks while careening down a steep mountain pass.

Earlier that day, a truck loaded with cottonseed lost its brakes and crashed and burned on the same pass. Farther down the road, a car had collided head-on with a pickup while trying to pass a string of trucks. Four people died on the highway that morning.

“Just wait until the soybean harvest begins — you won't want to be on this highway at all,” Ward explains. “It will be chaos.”

The nearest export-certified beef packing plants are to the south in Campo Grande, Mato Grosso do Sul. For many Mato Grosso cattle farmers, it's a two-day haul using open-topped trucks that typically carry 40-50 head of slaughter cattle.

From Campo Grande, refrigerated containers of boxed beef are hauled to port cities on trucks. The journey is 500 miles over somewhat better highways than are found up north.

Adding insult to the journey to port cities, truck drivers often have to spend several days in line waiting to unload. Brazil's diesel prices average about double those paid by American truckers.

At the port, containers are loaded onto ships bound for overseas destinations. It's easy to see how the logistics of getting product to just Brazil's seaports eats into the perishability limits of fresh beef.

No Deep Pockets

Farmers like Ward know rail service through Mato Grosso would dramatically reduce costs — especially when marketing into international markets. But, neither the Brazilian government nor private companies have pockets deep enough to finance the construction of rail lines through the rough and relatively unproductive grazing land that lies between the plateaus of cropland.

More likely, Ward says, BR-163, a dirt road that runs 1,200 miles through the northern half of Mato Grosso, will be paved. As proposed by a government/private industry consortium, the highway would cut through the Amazon rainforest to the Tapajós River village of Itaituba. Presently, the floating port facility at Itaituba, built by Cargill Agrícola S.A., is only used for soybeans.

From Itaituba, loaded barges are floated 160 miles to the Amazon River port of Santarém. There, ocean-going vessels can dock, load and return 400 miles to the Atlantic Ocean.

Meanwhile, Mato Grosso governor Blario Maggi is leading efforts to pave 1,500 miles of other state highways by 2006. Another 7,500 miles of dirt roads are to be graveled.

Dubbed the “King of Soybeans” — the world's largest bean farmer — Maggi knows better highways are critical to his state's economic future.

“With BR-163 paved, we would be able to double production of soya in this region within five years,” he says. Maggi rejects his critics' argument of conflicts between his roles as governor and farmer.

“It's no secret I want to build roads and expand production,” he said. “The people voted for that, so I don't see the problem.”

Opposition Vs. Opportunity

Maggi and others face opposition to their plans as concerns deepen over the health of the Amazon ecosystem. The proliferation of cattle and soybean farms is a lethal threat to the Amazon River basin, says Sue Branford, an American freelance writer working for The Ecologist magazine.

Branford says that by building roads, railways and waterways, the Brazilian government is subsidizing an agricultural boom while doing little to protect Amazon ecosystems. She and other activists see the developing transportation infrastructure supporting commercial crop production. Production, she says, that's intended for feeding animals in other countries, and that is pushing indigenous peoples and small subsistence farmers off the land.

Nonetheless, there are international interests working to help Brazil balance its massive transportation deficit.

In December 1998, the World Bank Group's International Finance Corporation spent US$31 million to rehabilitate, expand and operate, the shipping container terminal in Rio Grande, Rio Grande do Sul, Brazil's farthest south state. The terminal's annual capacity increased from 80,000 to 200,000 container moves.

Today, the Brazilian government is working on a more ambitious program — Brasil em Ação (Brazil in Action). On tap are hundreds of projects that offer the potential to accelerate economic and social development in coming years.

The total amount of these projects is estimated at around US$181 billion, with about US$106 billion for infrastructure. The major investments are expected in fixed-line telephones, power generation, transmission lines, roads and railroads, airports and ports, waterways and water resources.

Still, Brazil finds itself at a crossroads.

“Deterioration of Brazil's transportation network strangles economic growth as well as foreign trade and expansion of our agricultural frontier,” says José Carlos Mello, a member of the Fernand Braudel Institute of World Economics.

“It's hard to find a mode of transportation that doesn't reduce our quality of life,” he says. “This all adds to the notorious Custo Brasil — the extra cost of doing business in Brazil.”

See Brazil For Yourself

BEEF and sister publication Corn and Soybean Digest have sponsored tours to Brazil's agricultural frontier for the past two years. Tour participants see firsthand the challenges and opportunities faced by Brazilian ranchers and farmers as they try to feed their country and grow their international markets.

Planning for a 2005 tour is now underway. The 14-day tours generally occur in late January or early February. Prices range from $3,700-$4,000/person depending on specific tour arrangements.

Keep watching BEEF magazine for details or send a message to if you're interested in touring Brazil with us.