Impacts of Transportation and Logistics on Brazilian Soybean Prices and Exports

Abstract:As Brazilian soybean exports doubled between 2001/02 and 2011/12 and major production areas consolidated in remote inland Cerrado regions, moving product to port has proven to be a challenge. A review of the literature, data analysis, and interviews with experts in the logistics chain revealed that a lack of grain storage, overreliance on trucking, poor road conditions, and inefficient operations at rail terminals and ports impede a smooth flow of grain from farm to port. Because of the comparatively low per-unit values of agricultural bulk commodities, transportation may account for a large share of the total cost of soybean exports. As a result, it was hypothesized that increases in transportation costs may reduce farm-gate prices, affecting producer profitability and, thus, national production. To test that hypothesis, this study examined transportation costs from inland production regions to traffic hubs and the Santos seaport. A comparison of theoretical producer prices calculated based on logistics costs versus actual local prices was employed to confirm that transport inefficiencies have led to depressed farm gate prices.