May 31, 2013

Brazil's Ag Minister Predicts Increased Spending on Storage

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

The Brazilian Minister of Agriculture, Antonio Andrade, has stated that the Agriculture and Livestock Plan of 2013/14 will contain robust expenditures for expanded credit, increased crop insurance, the construction of grain storage units in Brazil, and the expansion of irrigation in the country. He made his announcement during the Bahia Farm Show held in the city of Luis Eduardo Magalhaes in western Bahia.

Included in the program will be lower interest rates, increasing lines of credit, and the inauguration of the National Storage Plan with the goal of guaranteeing enough storage space for all of Brazil's grain production. The storage plan hopes to encourage producers to store part of their production in order to secure better prices and to spread out the pressures on Brazil's inadequate infrastructure. The plan will primarily focus on the construction of private storage units, but an increase in public storage will also be included.

Transportation costs surged in Brazil during the peak of the soybean harvest due to a lack of trucks to transport the record large soybean crop. With an increased amount of on-farm storage units, there would be less of a need to move the entire crop at one time, thus helping to hold down transportation costs.

The Bahia Farm Show is one of the larger farm shows in Brazil and certainly the largest in northeastern Brazil. In 2012 the event attracted 60,000 visitors and generated R$ 595 million in sales.