December 21, 2011

10% of Brazil's Grain is Lost between the Field and the Ports

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

While Brazilian producers continue to increase the productivity of their grain production, it is estimated that 10% of the grain is lost between the field and the export terminal. Losses start to occur during harvesting and continue through transporting, storing, and exporting the grain. In total, an estimated 16.5 million tons of grain (soybeans, corn, wheat, rice, and dry beans), or nearly R$5 billion worth of products, will be lost in 2011/12.

The grain losses start during harvest when an estimated 1% of the production is lost due to poor adjustments of the combines. The manufactures have sensors that can detect these losses, but they are only available on the newer and more expensive combines. Many of the combines in Brazil are ageing and a poorly maintained combine can lose as much as 5% of the harvest.

Once the grain is put on a truck, the losses start to double and as much as 2% of the grain can be lost during transportation. The main problem is that many of the trucks used to transport grain were never intended for that purpose. The result is a constant trickle of grain falling out of the truck as it travels down pothole filled highways. Anyone who has ever driven behind a grain truck in Brazil can attest to the losses as a constant stream of soybeans bounce off the driver's windshield. To compound the problem even further is the fact that many of these trucks must travel as much as 1,500 kilometers to get to ports in southern Brazil.

Storing the grain causes even more losses. An estimated 5% is lost in storage due to micro toxins, insects, high humidity and rodents. Storage losses are expected to decline starting in 2017 when the Minister of Agriculture will start enforcing more stringent requirements in order for the storage facilities to be certified by the federal government. In their current condition, it is estimated that 30% of the storage facilities in Brazil would not meet the new certification standards.

Once at the ports, the losses continue to mount. Port officials feel they lose lest than 1% of the grain once it enters their facilities, but others feel the losses are closer to 2%. While producers have been improving their machinery and production practices, the ports are lagging far behind in the kind of improvements needed to keep pace with the increasing production.

Fixing this problem will not be quick or easy. At the current rate, Brazilian farmers are replacing only 6.7% of their combines on a yearly basis, which means that it will take 15 years to replace the fleet with improved machines. Replacing the grain hauling truck fleet is expected to take even longer. The one area where significant improvements can be made in the short term is in improved storage facilities and those improvements are being forced by the government.