Brazil, Panama, Washington | Organization for Economic Co-operation and Development says $300 billion in upgrades needed
CHICAGO, Ill. — Brazil is taking steps to fix its crumbling infrastructure and upgrade its ports, which are among the worst in the world.
The country has allocated $60 billion to fix the problem, including $31 billion over the next three years to reduce bottlenecks at the country’s ports, which is 10 times the investment in public ports over the last decade.
“After 20 years of neglect, this investment is welcome and shows that the government is concerned about the situation of the ports,” said Meton Soares, vice-president of Brazil’s National Transport Confederation.
Shippers say the investment won’t come in time to ease congestion early this year when what is projected to be a record soybean harvest reaches the already crammed ports.
A report released last month by the National Transport Confederation cites a survey by the World Economic Forum that ranked Brazil 108th among 112 countries for port infrastructure quality, below less developed nations such as Mozambique, Guyana and Nicaragua.
Alberto Weisser, chief executive officer of Bunge Ltd., said port facilities in Brazil and Argentina are a nightmare.
“It will make you cry,” he said in a speech at Johns Hopkins University’s School of Advanced International Studies.
Weisser said transportation problems cost Brazilian farmers $1.40 a bushel on their soybean crops.
However, Brazil isn’t the only country in need of an urgent up-grade to rail, road and waterway infrastructure. Low water levels on the Mississippi River are hampering grain barges and imperiling U.S. grain and oilseed exports.
“Infrastructure gets the attention it deserves only when it is dying.”
The Organization for Economic Co-operation and Development has said the world needs $300 billion in port and rail improvements from now until 2030.
Some of the work in Brazil is underway, said Bill Wilson, distinguished professor at North Dakota State University.
Three pieces of legislation have been passed that allocates $60 billion to infrastructure projects, some of which have already been completed. One massive project involves paving BR 163, an 1,800 kilometre dirt and mud highway in northern Brazil, and replacing 49 of its 51 bridges.
The revamped road will give farmers access to northern ports via the Amazon River, where their soybeans can be shipped to the European Union and Asia via the Panama Canal. Wilson said it will lead to in-creased soybean production and better export competitiveness.
“They’d have the ability by 2020 to increase their rate of (soybean) exports by about eight to 10 million tonnes,” he told delegates attending the DTN/The Progressive Farmer AgSummit 2012.
A $5.25 billion project will add a third set of locks on both the Pacific and Atlantic sides of the Panama Canal. It is expected to eventually double the capacity of the canal, expanding traffic by an average of three percent per year starting in 2014.
Wilson said it will be the equivalent of shifting from travelling on a country road with a bridge to cruising down a four-lane highway.
The project will expand the capacity of the canal to 75 transits a day from 42. As well, dredging the third lane to nearly 16 metres will make room for Super Post-Panama vessels, which are capable of carrying much more cargo than a Panamax boat.
However, Wilson said the canal expansion might not be a panacea for U.S. grain exporters:
- Grain shippers are unlikely to benefit from larger ship sizes because of port restrictions at many import destinations.
- There is a trend toward shipping more grain out of ports in the Pacific Northwest destined for Asia rather than shipping through the Gulf to the European Union.
- Anticipated toll increases through the Panama Canal will encourage a further shift of traffic through the Pacific Northwest.
Bunge North America Inc., Itochu Corp. and Korea-based STX Pan Ocean announced in 2009 that they were building an export grain terminal in Longview, Washington.
The $210 million Export Grain Terminal, which received its first ship in February, is the first export grain terminal to open in the United States in more than 25 years.
The Longview project prompted $1 billion in expansion projects by most of the other major exporters on the West Coast. Export capacity is expected to increase by 70 percent.
Exports of wheat, corn and soybeans through ports in the Pacific Northwest have increased to 35 million tonnes per year from 20 million tonnes a decade ago. Shipments through the Gulf of Mexico have declined by 10 million tonnes over the same period.