The third stop in Top Producer magazine’s Frontier Tour was the Brazilian state of Mato Grosso – the leading soybean producing state in the country. In 2009, Mato Grosso produced 661 million bushels (18 million metric tons) of soybeans.

6 combines harvesting a soybean field.

While in Mato Grosso, the group toured the operations of Weisul Agricola – a 150,000 acre producer of soybeans, corn, and cotton – and held meetings with Aprosoja – the trade association representing the state’s soybean producers.

On average, how do Brazilian soybeans get delivered to their customers? How does that compare to the United States?

Despite shipping an increasing volume of soybeans and soy products via the Amazon River and other interior waterways, Brazil remains heavily dependent upon its system of roads. As the below charts illustrate, 60 percent of Brazilian soybeans are delivered via highways. In contrast, 61 percent of U.S. soybeans are delivered via its interior waterway system.

A barge can transport one ton of freight 576 miles on one gallon of fuel. Railroads are capable of 413 miles. Trucks are only able to transport one ton of freight 155 miles using one gallon of fuel. In contrast with the United States, Brazilian soybeans are transported via the least efficient of the three major modes.

How does the United States and Brazilian soybean industry currently compare in cost of production and cost of transportation?

As the below chart illustrates, the competitiveness of the U.S. soybean industry is largely attributed to the greater efficiency of its transportation system. The U.S. is less competitive in cost of production. As Brazil invests in its infrastructure and the U.S. refrains from adequately investing in ours, the overall competitive advantage will erode.

Source: USDA

STC Secretary-Treasurer Ed Ulch, et al, discuss soybean production with an official from Weisul Agricola - Mato Grosso

Over the years, farmers, after visiting Brazil, would commonly remark how inadequate Brazil’s road system is in comparison to that found in the U.S. What’s the current state of Brazil’s road system that handles the movement of agricultural products? Have they made improvements?

Brazil has been very intentional in investing in the infrastructure that services agriculture. Many examples remain of poor quality roads that serve as significant obstacles to the delivery of soybeans and other agricultural products. However, a growing number of road projects are being initiated and completed – enhancing Brazil’s competitive posture in the world marketplace.

While in the Brazilian state of Amazonas, the group visited the André Maggi Group’s Hermasa facility – a soybean export terminal located along the Amazon River. The André Maggi Group is the largest private producer of soybeans in the world.

Soybeans being unloaded from a barge at Hermasa export terminal along the Amazon River

What is the annual volume of soybeans handled by Maggi’s Hermasa terminal?
The Hermasa facility handled 2.5 million metric tons (92 million bushels) of soybeans in 2009. The company expects to handle 2.8 million metric tons (103 million bushels) of soybeans in 2010. The volume of soybeans exported from the terminal is supported by 111,000 hectares (278,000 acres) of Maggi-owned farmland in the Brazilian state of Mato Grosso devoted to soybean production.

The Hermasa site includes a soybean processing facility – allowing soybean meal and oil to also be exported from the location.

Why is the Amazon River so unique as a commercial artery for soybeans and other freight?
The Amazon River is the largest river in the world by volumetric discharge with a total river flow greater than the next ten largest rivers combined. It accounts for approximately one –fifth of the world’s total river flow. During the rainy season, the Amazon River can exceed 120 miles in width. By contrast, the widest point on the Mississippi River is just under one mile across near Alton, Illinois. The Amazon River does not require a system of locks and dams to facilitate navigation.

At the Hermasa terminal, the Amazon is 1 ½ miles in width and 105 feet deep – allowing large, Panamax ocean vessels (2 million bushel capacity) to travel 600 miles from the mouth of the river at the Atlantic Ocean to the Hermasa terminal to be loaded with soybeans for the export market.

How much on site storage does the terminal possess?
The Maggi Hermasa terminal has storage capacity for 300,000 metric tons of soybeans (11 million bushels) – enough to fill six Panamax ocean vessels.

STC Vice Chair Dennis Feiken at the Maggi Group's Hermasa export terminal along the Amazon River

What did the farmers in the tour group conclude after visiting the Hermasa terminal?
Observing the Brazilian soybean industry’s increasing utilization of the Amazon River should inspire farmers and all who care about rural America to make sure our interior waterway system is utilized and maintained for commercial purposes. While the Amazon River is a waterway system unlike any other in the world for transporting freight, the interior waterway system in the United States plays an essential role in getting agricultural products to end customers. Unfortunately, our nation has repeatedly failed to invest adequately in our lock and dam inventory.

More than half of the 240 operational Army Corps of Engineers-funded lock chambers are over 50 years old – exceeding their economic design lives. Over the past six months, two locks along the Ohio River have suffered gate failures due to insufficient maintenance. Of the 37 locks on the Upper Mississippi River system, only three have more than a single lock chamber.

During our time in Panama, the group visited the canal and met with officials from the Panama Canal Authority to discuss the role of the canal in facilitating agriculture exports and to hear an update on the Panama Canal’s expansion.

STC Chairman Dean Campbell at Miraflores Locks - Panama Canal.

Why is the Panama Canal being expanded?
While much investment over the years has been allocated for canal operations and maintenance, the number and size of the lock chambers have remained the same since the canal’s opening in 1914. Currently many of the largest ocean vessels exceed the size of the canal locks. To maintain its role as a key artery for global commerce in the future, expansion became necessary.

How is the Panama Canal being expanded, and when will it be completed?
An additional third channel with a new set of locks is being constructed – doubling the size of ships able to transit the canal.  The project is scheduled to be completed in 2014.  Approximate cost of the expansion project is $5.2 billion.

Tanker ship transiting the Miraflores Locks - Panama Canal.

What are the largest ships currently able to transit the canal?
A Panamax vessel is the maximum-sized category of ocean vessel able to transit the Panama Canal: 965 ft long × 106 ft width (beam) × 190 ft high.  The draft cannot exceed 39.5 ft.  This size is primarily determined by the dimensions of the canal’s lock chambers: 1,050 ft long × 110 ft wide × 85 ft deep.  Panamax vessels can transport 2 million bushels of soybeans.

How does the Panama Canal expansion project affect U.S. agriculture? Why should farmers care about this initiative?
There is broad consensus that the completion of the Panama Canal expansion in 2014 will have a sizable impact on the flow of agricultural products in the United States. What earlier may have flowed to a west coast port may, in the future, gravitate to the Gulf of Mexico ports due to the larger ships the expanded Panama Canal will accommodate.

If U.S. agriculture is facing a significant change to how grain flows in this country, it is important to understand it more thoroughly than we currently do. This change in flow will certainly impact our current infrastructure. Some corridors may be further exhausted. The bottleneck that often occurs at the Panama Canal may simply shift, once the expansion is completed, to U.S. ports or our interior waterways. On the other hand, the pressure on other corridors may be relaxed. If greater bottlenecks occur at the Gulf ports or in the interior waterway system, it becomes all the more critical for farmers to be engaged in promoting a well-financed, efficient lock and dam and port system in this country.

Panama Canal
• 48 miles in length
• Over 14,000 (40 per day) ships handled annually
• 36.8 million metric tons of U.S. grain transported through the Panama Canal in 2009
• 57% of U.S. grain exported from the Gulf of Mexico travels through the Panama Canal

The Soy Transportation Coalition (STC) is a co-sponsor of Top Producer magazine’s 2010 “Frontier Tour” to Panama and Brazil. One of the primary focuses of the trip is to highlight the role of transportation to the profitability of the soybean industry. STC Chairman Dean Campbell (Coulterville, Illinois), Vice-Chairman Dennis Feiken (LaMoure, North Dakota), Secretary-Treasurer Ed Ulch (Solon, Iowa), board member Scott Gauslow (Colfax, North Dakota), and executive director Mike Steenhoek are participants on the trip.

The Soy Transportation Coalition is comprised of seven state soybean boards, the American Soybean Association, and the United Soybean Board. The goal of the STC is to promote a cost effective, reliable, and competitive transportation system for the soybean industry.

The United Soybean Board is the lead sponsor of the Frontier Tour. To view USB’s reports during the trip, go to: http://www.unitedsoybean.org/Programs/Frontier_Study_Tour_Program.aspx