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February 29, 2016

Tolls as High as $1.00 per Bushel for Soybeans Leaving Mato Grosso

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

Brazilian farmers have long complained about the poor condition of the nation's highways and the very high cost of transporting their grain to distant port facilities. They want improved highways of course, but they consistently opposed the idea of converting the major highways in Brazil into toll roads insisting that the tolls would be paid by farmers in the form of lower grain prices.

The Soybean and Corn Producers Association of Mato Grosso (Aprosoja/MT) is petitioning the National Land Transportation Agency (ANTT) to reconsider the level of tolls they are recommending for highway BR-163 that connects Mato Grosso to ports on the Amazon River.

Soybean producers in Mato Grosso are in a particularly bad position when it comes to transportation costs. Central Mato Grosso is approximately 2,000 kilometers from Brazil's southern ports and 1,200 kilometers from Brazil's northern ports on the Amazon River. If the soybeans are shipped either south or north, the trucks must travel highway BR-163, which is the only major highway connecting all these locations. The problem is that the entire length of BR-163 is being converted into a toll road in order to pay for widening of the highway.

In the latest proposal, ANTT is proposing a toll of R$ 10.05 per 100 kilometers for every axil on the truck. A truck with 9 axils carrying soybeans from the city of Sinop in northern Mato Grosso to the port of Miritituba in the state of Para (a distance of 976 kilometers) would pay R$ 886.50 on the way there (US$ 221.62) and if the truck returned empty, the total round trip would cost approximately R$ 1,700 or US$ 425.00. These calculations were made using an exchange rate of 4 Brazilian reals per dollar.

If the truck is carrying 800 bushels of soybeans, the charge would be approximately US$ 0.53 per bushel. It gets much worse if that same truck would carry soybeans to Brazil's southern ports. The round trip toll charges could be double or approximately US$ 1.00 per bushel. These are just the toll charges and do not include the freight charges. If the truck would back-haul a load when returning to Mato Grosso, the farmer would only have to pay half the toll charge.

According to Aprospja/MT, in 2015 there were 3.8 million tons of grain shipped out of the Port of Miritituba and that is expected to increase to 8.3 million tons in 2016. At the Port of Miritituba, the grain is loaded unto barges that proceed to the mouth of the Amazon River where it is transferred onto ocean vessels.