Impacts of Transportation and Logistics on Brazilian Soybean Prices and Exports

As Brazilian soybean exports doubled between 2001/02 and 2011/12 and major production areas consolidated in remote inland Cerrado regions, moving product to port has proven to be a challenge. A review of the literature, data analysis, and interviews with experts in the logistics chain revealed that a lack of grain storage, overreliance on trucking, poor road conditions, and inefficient operations at rail terminals and ports impede a smooth flow of grain from farm to port. Because of the comparatively low per‐unit values of agricultural bulk commodities, transportation may account for a large share of the total cost of soybean exports. As a result, it was hypothesized that increases in transportation costs may reduce farm‐gate prices, affecting producer profitability and, thus, national production. To test that hypothesis, this study examined transportation costs from inland production regions to traffic hubs and the Santos seaport. A comparison of theoretical producer prices calculated based on logistics costs versus actual local prices was employed to confirm that transport inefficiencies have led to depressed farm gate prices.