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March 14, 2014

Brazil's "Soybean Highway" (BR-163) now Officially a Toll Road

In a signing ceremony held Wednesday in Brasilia, President Dilma Rousseff reaffirmed her commitment to improving the highway system in Brazil. Upon her signature, BR-163 in Mato Grosso, which has been referred to as Brazil's "Soybean Highway" has now been turned into a toll road under the authority of the company Odebrecht S/A. The 850 kilometers that are now under the direction of the company extends on the south from the border of Mato Grosso and Mato Grosso do Sul to the city of Sinop in northern Mato Grosso.

The highway is currently two lanes and the agreement calls for 450 kilometers of the highway between Rondonopolis and Nobres to be widened into four lanes at an estimated cost of R$ 4.6 billion. Work on the project will begin in June and the company has a five year window to complete the entire project. Tolls will start to be collected in 2015 for a period of thirty years. There will be nine toll stations along the length of the highway and the average initial toll charged at each station per passenger vehicle will be R$ 5.22 (USD 2.20).

Tolls for larger vehicles will be charged on a per-axil basis and the largest soybean hauling semi-trucks can have as many as 9 axils. The tolls for these heaviest trucks could be as much as R$ 47.00 per station (approximately USD 11.00).

The highway is currently in poor condition and it is rated one of the worst in Brazil. The National Land Transportation Agency (ANTT) has rated 49% of the road as being in very poor condition. The highway cuts through the heart of the state which is Brazil's largest soybean and corn producer and 70% of the grain produced in the state moves along BR-163. Tens of thousands of trucks use the highway on a daily basis hauling soybeans and corn to southern ports and backhauling fuel, fertilizers, food, domestic goods, etc.

For decades, farm organizations in the state have been demanding that the highway be improved, but they opposed the conversion of the highway into a toll road because they realized that the cost of the tolls would be discounted from the prices they are paid for their grain. Even though an improved highway would lower freight costs, the addition of the toll charges would probably result in no net savings.

The northern extension of BR-163 from the city of Sinop to the Amazon River port city of Santarem is currently being asphalted. Approximately 330 kilometers of the 1,100 project still needs to be asphalted as well as numerous bridges still need to be built. The entire project is scheduled to be completed in late 2014 or early 2015.

Once completed, soybeans and corn produced in central Mato Grosso will start to be shipped northward to ports on the Amazon River instead of the longer routes to Brazil's southern ports. An estimated 2-3 million tons of Mato Grosso's 2013/14 soybean crop will be trucked north in 2014 and that is expected to increase to 6 million tons in 2015 and potentially more than 20 million tons by the year 2020.