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Brazilian farmers call for cheap credit to ease grain storage crunch
By William Clarke - Published 17/03/2017

Grain growers in Mato Grosso, Brazil's top growing state, are moving to address a structural shortage of grain storage, as harvests get ever bigger.

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 route.

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 credit

 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.

Export disruption

Concerns over storage follow disruption on one of the main routes out of Mato Grosso, the highway running north carrying grain to Amazon barges.

"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 Cordonnier said.

"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."

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