March 12, 2013

Brazil Government to Bid Tocantins River Barging Operation

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

The president of the Logistical Planning Company in Brazil (EPL) announced last week that work on Tocantins River barging operation is set to start within one year. The barging operation will be in association with the hydroelectric dam Lajeado being built on the river. Taking part in the announcement was the Brazilian Confederation of Agriculture and Livestock, Brazilian politicians, and representatives from the Development Bank of China, which is financing the operation as part of their ongoing efforts to reduce the cost of raw materials imported by China. The total cost of the project is estimated at R$ 3.5 billion.

The final engineering plans are expected to be completed by June and bids for the project are expected to be opened up in September. The project will include two locks and eventually a port for exporting the grain. The federal government will lease the administration of the barging operation to private company for a determined length of time.

The barging operation will benefit farmers in the region called Mapitoba, which includes the states of Maranhao, Piaui, Tocantins, and Bahia in northeastern Brazil. One tug and four barges on the river could transport the equivalent of 86 rail cars of 70 tons each or 172 semi-trucks that carry 35 tons each.

The goal of much of the infrastructure development in Brazil is to reduce the cost of transporting the ever increasing production of soybeans and corn in the country. Included in that goal is to also stimulate the conversion of pastureland to row crop production as a way to increase agricultural production without having to clear cut forest in the Amazon Region. The state of Tocantins alone could eventually have 4 million hectares of row crop production (10 million acres) just by converting areas of degraded pastures into additional soybean and corn production.