February 7, 2011

Ex Minister Proposes China Financing for Port Improvements

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

Even though Brazilian port officials claim they will spend US$ 30 billion on port improvements over the next few years, Brazilian producers and agribusiness personnel are in agreement that more needs to be done to prevent the entire system from collapsing under the weight of increased exports and imports. The two biggest ports in Brazil for agricultural exports are the Port of Paranagua in the state of Parana and the Port of Santos in the state of Sao Paulo, and these two ports receive most of the attention of the media, but there are many other ports in Brazil that are in more urgent need of immediate investments.

Experts in the field have identified 260 bottlenecks at Brazilian ports that need immediate attention. Ipea has identified the ports that need the most urgent attention as Victoria in Espirito Santo, Itaqui in Maranhao, Pecem in Ceara, Rio Grande in Rio Grande do Sul, and Santos in Sao Paulo.

The former Minister of Agriculture, Roberto Rodrigues, believes that Brazil should work out an agreement with China that guarantees that a minimum level of commodities would be shipped to China in exchange for the Chinese financing of the needed logistical improvements in Brazil including the ports. He feels this would be a win-win for both countries. The Chinese would get assurances that they could continue to source needed commodities, both agricultural and minerals, and Brazil could get the immediate financial resources that are urgently needed.

The Director of Planning for the Port of Santos, Renato Barco, feels that the port has made a good start on needed improvements. The port has a long range plan that calls for US$ 6 billion to be invested in port expansion between 2008 and 2024. Of that total, R$ 200 million has already been allocated to increase the draft of the port from 12 meters to 15 meters and to extend the public docking berth from 150 meters to 220 meters.