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August 6, 2015

Brazil's "Soybean Highway" Frustrates Farmers in Mato Grosso

The unfulfilled promise of highway BR-163 continues to be a source of frustration for farmers and grain companies in Mato Grosso. Highway BR-163 is often called Brazil's "Soybean Highway" because it carries the vast majority of soybeans produced in Mato Grosso to distant ports in southern Brazil. Mato Grosso is the largest soybean producing state in Brazil responsible for nearly one-third of Brazil's soybean production.

In 2009 work started on asphalting the highway northward from northern Mato Grosso to the port city of Santarem on the Amazon River with the intension of shipping grain north to new ports on the Amazon River. The project was divided into sections that were bid on by construction companies. Unfortunately, many of the companies grossly underestimated the difficulty and expense of building a remote highway through the rainforest with multiple bridges. Some of the companies succeeded in completing their sections while others filed for bankruptcy and still others are currently in judicial limbo.

The result is that 237 kilometers of the 1,100 kilometer project have not been asphalted and the final completion date is now unknown. The current hope is that it will be completed sometime in 2017, but previously it had been hoped that it would be completed in 2014, then in 2015, then in 2016. Part of the problem is the extremely slow judicial process in Brazil. Litigations such as bankruptcies can take many years to wind their way through the Brazilian court system. Additionally, some sections of the road that have been asphalted are already in poor condition due to sub-par construction.

The original roadway was carved out of the Amazon rainforest during the decade of the 1970's, but it remained unpaved and basically unpassable during the rainy season ever since.

Multiple grain companies have either completed construction or are in the process of constructing barging facilities on the Tapajos River (a tributary to the Amazon) at the city of Miritituba, which is alongside of BR-163. From there, the barges would transport soybeans and corn to ports near the mouth of the Amazon River. From the city of Sinop in northern Mato Grosso to the barging facilities at Miritituba, there are 126 kilometers that are not asphalted.

Continuing northward between the city of Miritituba and the port city of Santarem on the Amazon River where Cargill has a port facility, there are an additional 111 kilometers that have not been asphalted. Combined, there are 237 kilometers remaining to be asphalted. Some of those sections have had minimal preparation work completed while in other sections, nothing has been done.

The distance from central Mato Grosso to the Port of Santos in southern Brazil is approximately 2,000 kilometers and the distance northward from central Mato Grosso to the Amazon River is approximately 1,300 kilometers. The Mato Grosso Soybean and Corn Producer Association estimates that transportation cost will decline 34% if grain could be shipped north instead of south.