Aug 30, 2010
Timing of Takeover of Brazilian Ports Questioned
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The announcement on Wednesday that the Brazilian federal government was taking over the public operations of numerous state run ports has many wondering about the timing of the action. The ports in question are Paranagua and Rio Grande in southern Brazil and five smaller ports in the state of Amazonas on the Amazon River. Only the public operations at the ports were taken over while the private operations were unaffected. The ports in northern Brazil were taken over by the Transportation Minister and the southern ports were taken over by the Special Secretary of Ports. The announced reason for the takeovers was to combat corruption.
What has many port users wondering is the timing of the action. Problems at the Port of Paranagua have been years in the making. The latest series of incidents occurred in 2003, 2004, and 2005 when the governor of the state of Parana, Roberto Requiao, decided that GMO soybeans would be prohibited from being transported within the state of Parana, which includes the Port of Paranagua. Trucks were stopped at the state border and if they were found to contain GMO soybeans, they were prohibited from entering the state or proceeding to the port.
At the time, the governor's brother was in charge of the port, so of course he agreed with the governor's actions. Many producer groups and transportation companies petitioned the federal government to intervene, but no action was taken. Eventually, the federal government ordered the state to rescind the policy, but producers and transportation companies lost millions of dollars due to the restrictions.
What has many wondering is why it took five years to intervene in port operations in addition to the fact that a new port administration just took over port operations at Paranagua four months ago.
The action taken against the northern ports was well received by port users. Problems have been mounting for several years due to inadequate infrastructure needed to handle containers at the public areas at the ports. Transportation companies have been complaining that their container business has been forced to use private terminals, which have higher costs.