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September 20, 2017

Brazil Needs 50,000 km Railroad System to meet Future Demand

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

Even though Brazil just produced record large crops of soybeans and corn in 2016/17, the country could have produced even more it had an adequate infrastructure. That is the opinion of Luiz Antonio Fayet, from the Logistics and Infrastructure Division of the National Confederation of Agriculture (CNA).

CNA estimates that within 5 years Brazil will become the major grain exporter in the world and their current infrastructure will not be able to accommodate the increased production. The increase in production will generally occur north of 16° South Latitude which passes through Mato Grosso, Goias, Brasilia, Minas Gerais, and southern Bahia. The problem is that the increase in grain production will occur where the infrastructure is least developed.

A group of engineers from the Engineering Institute has been working on this problem for two years and they estimate that Brazil will need an integrated railroad system of 50,000 kilometers to meet the future demand. Brazil currently has 32,000 kilometers of railroads, but unfortunately 70% of the existing railroads are inoperable for grain shipments. Therefore, Brazil would need to reform 22,400 kilometers of existing rail lines and then build an additional 18,000 kilometers of new rail lines.

The President of the Latin American Railroad Association, Jean Pejo, feels the best way to address this issue is to invest in an integrated system of railroads, highways, barging operations, and storage facilities. Pejo feels that priorities must be set before undertaking such a huge nationwide project.

He thinks the first priority should be the completion of the North/South railroad between the cities of Acailandia, in the state of Maranhao and Estrela D'Oeste in the state of Sao Paulo. This would complete a continuous rail link from ports in northern Brazil and ports in southern Brazil cutting through the areas where much of the new grain production will occur. From this central railroad, additional railroads could be built east and west to channel grain into the North/South Railroad.