A published article in today’s Financial Times (paid subscription or free metered view) describes how a market opportunity for corn farmers in Brazil has stalled because of an inefficient logistics infrastructure and a clogged port.
We are all aware of the extraordinary drought conditions that are impacting U.S. corn production this summer. However, farmers across Brazil, blessed with favorable climate and a second growing season, are expected to harvest a bumper 75 million tons corn harvest, and have the opportunity to become a larger global exporter of this commodity. According to FT, U.S. meat producers have recently approached Brazilian producers which will to be the first time in history that Brazil will export corn to the U.S. The problem is getting the corn processes and shipped from the port of Santo’s port, which accounts for almost half of that country’s agricultural shipments. The FT article describes conditions where trucks are tied-up upwards of three days, waiting to be unloaded, and there are fears that Brazil’s logistics infrastructure problems will curb an opportunistic market opportunity. Warehouse space is described as in short supply and there is over dependence in truck transport vs. other surface methods such as rail.
From our Supply Chain Matters perspective, the Brazil dilemma is yet another example for governments to have a comprehensive and viable modern logistics infrastructure investment plan. Global food and other markets may well feel the important effects of one or some other country’s inefficiency in moving needed commodities to export markets.