February 19, 2015

Work Started on Improving Brazil's "Soybean Highway"

Farmers in Mato Grosso have long complained about the poor condition of the highways in the state and the high cost of transporting their grain to end users or export facilities in southern Brazil and they are eagerly awaiting progress on improving the major highway in the state - BR-163. This is the main highway in Mato Grosso that traverses the state north to south and is often referred to as the "Soybean Highway" because of the millions of tons of soybeans that are transported on the highway on a yearly basis.

In 2013 the federal government conducted a series of auctions for private companies to bid on improvement projects to widen the 2 lane highway to 4 lanes and to turn it into a toll road. The winning bidders are required to make the improvements and they have the right to collect the tolls for a period of 30 years. The companies can start collecting the tolls when 10% of the work has been completed and the tolls in Mato Grosso will be R$ 2.64 per axil for every 100 kilometers or about US$ 1.00 per axil for every 60 miles.

The first completed 4-lane segment of the project in Mato Grosso will be 22.7 kilometers of highway connecting the city of Rondonopolis to the new intermodal gain complex south of town. Thousands of trucks per day use this portion of BR-163 to transport soybeans and corn to the grain terminal operated by America Latina Logistica where it is loaded onto railcars destined for the Port of Santos in southeastern Brazil.

Within five years, 450 of the 850 kilometers of BR-163 that is within the state of Mato Grosso is scheduled to be widened from 2 lanes to 4 lanes. The highway continues south into the neighboring state of Mato Grosso do Sul where similar improvements are scheduled to be completed by 2019. After completion, it is anticipated that a truck will be able to traverse the two states in 20% to 30% less time saving as much as one day of travel.

Trucks account for at least half of the vehicles using the highway and during the harvest season, the truck traffic can increase by 20%. The current lack of passing lanes can slow down the travel times by as much as 85% during peak periods resulting in long delays. At some points, the traffic is four to five times the capacity of the highway.

Along with an improved highway, there will also be much improved emergency services. The toll operators will have emergency equipment and medical personal positioned at each of the nine toll plazas in the state. Currently those services are only available in the cities scattered along the highway.

The increased cost of the toll is expected to be compensated for by faster travel times and reduced wear and tear on the trucks. Farmers are hoping that all the toll costs won't be passed on to them in the form of lower grain prices, but that still remains to be seen.