Fertilizer inflation forces overhaul of Brazil’s ports and railways

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(Bloomberg) – Brazil’s heavy reliance on fertilizer imports is driving major modernization of the country’s ports, railroads and distribution centers.

Hundreds of millions of dollars are being invested in Brazil’s logistics infrastructure, all to get fertilizers faster from ports to inland farms thousands of miles away that produce the most soybeans, coffee and sugar in the world. The agricultural powerhouse’s need for fertilizer is especially great as food inflation has taken hold of the planet.

Transporting all these products to a country as big as Brazil is no mean feat. Farmers buy no less than 85% of their fertilizers there on world markets, and their use has increased by 30% since 2017 as production increases. The grain is also grown in more remote regions, such as northeast Brazil.

Transport is mostly by truck, but there are so many crops and chemicals to move over such great distances that the system is strained.

The solution: change the country’s railways. Logistics companies like Rumo and VLI are partnering with fertilizer heavyweights like Yara International ASA and Mosaic Co., primarily to make it easier for railroad cars transporting grain to ports to pick up fertilizer on the way back.

“Where the grain goes, the fertilizer arrives, and we are working to simplify the logistics process,” said Maicon Cossa, commercial vice president of Yara Brasil Fertilizantes. “The distances are great, and if you’re in a bad spot, you’re out of the game.”

Normally, fertilizers are offloaded at ports via an unwieldy method using a crane that picks up the product from a ship, drops it onto a truck, which then takes it to a silo for final shipment. . The new, faster systems will use mobile cranes and conveyor belts to move products directly into silos or trains.

Also Read: Ships Stand Empty for Weeks Waiting for Delayed Brazilian Soybeans

Other investments include VLI’s new 200 million reais ($37 million) terminal in the state of Tocantins, Brazil, which will transport fertilizers from the port of Itaqui 600 miles away. The Port of Santos’ Tiplam terminal is being upgraded at a cost of 100 million reais ($21 million) and will transport chemicals to Brazil’s biggest coffee-growing region, Minas Gerais, 400 miles away .

There are also three projects in the North Arc, the new agricultural frontier in northeast Brazil, to turn outgoing grain shipments into fertilizer on the return trip. In Santos, negotiations between Cofco, Rumo and Hidrovias do Brasil will lead to shared logistics on their terminals.

The port of Santos, Brazil’s largest, plans to revamp its internal railroad to speed up fertilizer shipments, and also won approval last week to auction a connected terminal. The port’s total capacity will increase by 49% to 240 million tonnes per year by 2040. Rail shipments are expected to increase by 77% to 86 million tonnes per year.

“This new terminal will help reduce the cost of fertilizers for the majority of growing areas in the country,” said Bruno Stupello, director of business development and regulation for the Santos Port Authority.

© 2022 Bloomberg L.P.

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