Grain growers in Mato Grosso, Brazil's top growing state,
are moving to address a structural shortage of grain storage, as harvests get
The lack of storage forces farmers to move their crops down
the supply chain as fast as possible, leaving Brazilian exports vulnerable to
the sort of disruption seen this year, when heavy rains damaged a key road
Last week Aprosoja-MT, the soybean and corn producers
association of Brazil's top grain state, announced a plan to remedy storage problems.
The association estimates soybean and maize production at
around 55m tonnes, with storage capacity at around 55m tonnes.
"Producers and the government need to be aware of this
because it is strategic," said Emerson Zancanaro, coordinator of the association's
agricultural policy commission.
Calls for cheaper
The association said
expansion of storage would allow producers to hold back some crop till out the
peak export period, taking advantage of better prices and lower freight costs.
Aprosoja-MT has requested the Brazilian Minister of
Agriculture to reduce the interest rates charged on loans for production and
the building of grain storage, from the current 9.5% to 7.5%.
If these changes are made, they will be Brazil's in the
2017-18 Harvest Plan, which will be implemented by June this year.
Concerns over storage follow disruption on one of the main
routes out of Mato Grosso, the highway running north carrying grain to Amazon
"These sort of infrastructure problems make for dramatic
pictures that everyone can relate too," said analyst Dr Micheael Cordonnier.
But Dr Cordonnier warned that the lack of grain storage in
Brazil was "probably a more significant infrastructure problem".
"This deficit in grain storage is harder to see and harder
to relate to, but it is probably much more important to farmer's bottom line
than the temporary closure of a highway."
"Without adequate storage, farmers are forced to sell more
of their grain production out of the field at harvest time when prices are
generally the lowest and freight rates are generally the highest," Dr
"If farmers in Mato Grosso could store their grain until the
peak of the harvest and export season has passed, the reduction in freight
rates alone could translate to as much as one dollar per bushel in savings."