October 2, 2012

Grain from Mato Grosso Could be Exported via Amazon River

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

The Minister of Transportation in Brazil announced the release of funds to conduct a study concerning the feasibility of instituting a barging operation linking northern Mato Grosso with ports on the Amazon River. The proposed route would be on the Teles Pires River, which starts in northern Mato Grosso, and the Tapajos River, which mergers with the Amazon River at the city of Santarem. The study will look at the engineering needed for locks to overcome the drop in river level as well as the economics of the projects and environmental hurdles that must be overcome.

The proposed barging operation has the potential to save an estimated R$ 2 billion per year in transportation cost to move part of the 40 million tons of grain that will be produced in the state this growing season. Currently, two thirds of the state's grain production is transported by truck to ports in southern Brazil with nearly a third of the grain transported by rail to the Port of Santos. Very little of the state's grain production is currently being transported by barge.

The R$ 14 million study is expected to take 3-4 months depending on the conditions along the rivers and it will detail the amount of investments needed, where proposed locks would be located, where the shipping channel would be located, and any alterations that would be needed to make the river navigable. The proposed system could stretch over 1,000 kilometers between northern Mato Grosso and the Port of Santarem.

The Mato Grosso Soybean and Corn Producers Association (Aprosoja) estimates that the cost of transporting a ton of soybeans from northern Mato Grosso to a port facility could fall from its current level of R$ 227 per ton to R$ 60 by using the proposed barging operation. A barging operation would also reduce CO2 emissions by 95% by taking thousands of trucks off of Brazil's congested highways.

A new barging operation which takes part of Mato Grosso's production north instead of south would also help to ease the chronic congestion that is a yearly occurrence at Brazil'Gs southern ports.