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February 1, 2019

Brazil Government Reaffirms Commitment to Complete BR-163

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

Brazil's new Minister of Agriculture, Tereza Cristina, in conjunction with the Minister of Infrastructure, Tarcisio Gomes de Freitas, recently reaffirmed their commitment to insure the unimpeded movement of grain northward on Highway BR-163 from Mato Grosso to ports on the Amazon River. Their commitment is part of what is called Operation Radar II.

Operation Radar II involves the daily inspection and maintenance of unpaved trouble spots on BR-163 within the state of Para in order to insure the continued movement of traffic northward to the Amazon River. In the trouble areas, they have established three bases of operations which include equipment, vehicles, and personnel from the National Department of Infrastructure and Transportation (DNIT) as well as the Brazilian Army, who is responsible for building the highway.

There is only a small section of the highway that is not paved (approximately 35 miles), but it runs through a hilly area where the heavy grain trucks cannot climb the steep unpaved inclines during periods of heavy rains. During the last two Februarys in a row, traffic was stopped for several weeks at a time after heavy rains, which resulted in extremely long traffic jams of grain trucks heading north.

The resulting "bad publicity" was a black eye for the Brazilian government who is now committed to resolving the problem once and for all. The Minister of Agriculture has reiterated that the paving of the last remaining sections of BR-163 will be completed in 2019.

BR-163 is probably the most important highway in Brazil as far as grain movement is concerned. We hear about problems on the far northern section of the highway near the Amazon River, but BR-163 actually extends 3,470 kilometers from the Amazon River all the way to far southern Brazil.

It is by far the most important highway in the state of Mato Grosso, which is Brazil's largest grain producing state. Brazil is expected to produce 237 million tons of grain in 2018/19 with Mato Grosso accounting for 63.4 million tons (26.7% of the total). The vast majority of grain produced in Mato Grosso must be trucked on BR-163. There is one railroad in southeastern Mato Grosso that connects to the Port of Santos, but to get grain to the railroad, it must be trucked on BR-163.

Construction of the northern part of the highway connecting the city of Cuiaba, which is the capital of Mato Grosso, with the port city of Santarem on the Amazon River, started during the decade of the 1970's. Over the intervening 50 years, residents of the state have been clamoring for this highway to be paved and then turned into a four-lane limited access highway. That is still the "plan" after 50 years!

Currently there are about 110 kilometers that have been turned into a four-lane highway, but construction on the remaining sections is now tied up in court due to financial problems with the company that won the bid to complete the highway. Once completed, all of BR-163 within the states of Mato Grosso and Para will be turned into a toll highway. Tolls are already being collected within the state of Mato Grosso.

Eventually, a railroad called the "Grain Railroad" will be built parallel to BR-163 from northern Mato Grosso to ports on the Amazon River. Bidding on the Grain Railroad is expected sometime in 2019, but completion of the railroad is expected to take another 10 years. In the meantime, paving the reaming sections of BR-163 would go a long way toward increasing the volume of grain heading north in Brazil.