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Brazil’s Mato Grosso Hindered by Poor Transportation

Cuiabá, Rondonópolis and Alto Araguaia – all in the midwestern state of Mato Grosso – witnessed their agricultural production increase by eight times in less than 20 years, were transformed into Brazil’s greatest soy and cotton producer and count on the export of these agricultural commodities as the bases of their economy.

However, transport infrastructure did not progress at the same speed. Fearing a ‘logistics blackout’, term commonly used in Brazil nowadays, private companies started investing heavily to overcome at least part of the existing bottlenecks.

Up to now US$ 517 million were invested to build Ferronorte, a 500 km railroad from the frontier of the states of São Paulo and Mato Grosso do Sul (in the southeast and midwest of Brazil) to Alto Araguaia, a city in the southeast of the state of Mato Grosso.

Another US$ 97 million were invested in the Madeira-Amazon waterway. Both undertakings counted upon investments from private companies. Before the end of 2006, an extra US$ 345 million should be invested to pave the state highways, where the city halls and rural producers, in a public-private partnership, will cover half of the expenses.

Ferronorte and the Madeira-Amazon waterway are the means of transport for 41% of grains and fibres produced in the state, totalling 9 million tons.

Four years ago, practically all the crop was transported by trucks to Santos or Paranaguá ports, in the southeastern state of São Paulo and southern Paraná respectively. The state produced almost 22 million tons of soy, corn, rice, sorghum and cotton last harvest.

“All infrastructure constructions in this state will only be made with private company participation. We don’t expect the federal government to spend a lot around here,” said the Secretary of Strategic Projects for the state of Mato Grosso, Cloves Vetoratto.


The last part of the Ferronorte railroad, a 100 km stretch between the cities of Alto Taquari and Alto Araguaia, both in the state of Mato Grosso, was inaugurated last year, with the participation of President Luiz Inácio Lula da Silva.

The river port at Alto Araguaia, however, has been in operation since 2002. Today, the railroad, which is controlled by the company Brasil Ferrovias, transports seven million tons of chaff and soy, amounting to about one third of the states’ production.

The railroad at Alto Araguaia has already brought positive returns for local producers. “Whoever made use of the railway last year had at least a 40% freight cost reduction,” said Homero Alves Pereira, Rural Development Secretary and president of the Agriculture and Livestock Federation for the State of Mato Grosso (Famato).

“Ferronorte’s clients are big trading companies, working with very large volumes, so for them freight is an important aspect of the operation. The railway is unbeatable. In regions covered by railroads, the train is the dominating means of transport,” added José Roberto Walker, Brasil Ferrovias spokesman.


The other private undertaking, which is not located in the state of Mato Grosso but serves producers in the west and northwest of the state, was constructed by a local company, the André Maggi group. The group belongs to Governor Blairo Maggi, who today is the greatest individual soy producer in the world.

The Madeira-Amazon waterway, as the name suggests, sails the Madeira and Amazon rivers and was inaugurated in 1997. It goes from Porto Velho, capital of the northern state of Rondônia, to Itacoatiara a city in the state of Amazonas, also in the north of Brazil.

In Itacoatiara the cargo is shipped on the Amazon River until it reaches the Atlantic Ocean, and then sails to destinations abroad.

“Since the 1980s the region (west and northwest of the state) has been considered an agricultural frontier in Mato Grosso, but with the high freight costs production was reduced and agricultural growth was hindered. For commercial reasons, the Maggi group was interested in the region and also owned property there,” said the company president, Pedro Jacyr Bongiolo.

Today the waterway transports about 2 million tons of soy and corn per year on a 1,150 km stretch from Porto Velho to Itacoatiara, and then a further 1,100 km on a ship to the Atlantic Ocean. On the way back, as in Ferronorte, the vessels carry imported fertilizers.

According to Bongiolo, a study made by the Maggi group before the waterway showed that the river would yield savings of US$ 25 per ton transported, in comparison with highway costs. “The estimates were in fact correct,” he assured.

Although undertakings such as the railway and the waterway help overcome logistics bottlenecks in Mato Grosso, they are located on the borders of the state and even out of it. To get to the river ports the cargo still has to travel long distances on trucks.

“These undertakings helped transportation in Mato Grosso considerably, but are not yet the complete solution, there is still a lot to do,” added Homero Pereira.

It is important to remember that Mato Grosso is located in the midwest of Brazil, hundreds and even thousands of kilometers away from the sea in any direction.

Pereira reminded that an inadequate transport infrastructure increases the producers’ costs, causing them to lose competitiveness on the international market, which is a serious problem for an exporting state.

Cities that concentrate a high soy production, such as Sorriso and Sinop in the north of the state, are hundreds of kilometers away from Alto Araguaia.

In the same way, Sapezal, productive center on the west of Mato Grosso, is 950 km away from Porto Velho. On top of everything, roads in bad conditions cause material waste.

On the BR 364, a highway cutting through the southeast region of the state, rich in soy and cotton, it is possible to see a trail of soy grains and cotton flakes on the road shoulder that have fallen off the trucks.

State highways

With this in mind, the local government has, together with city halls and farmers, released a project for recovery of state-owned highways and improvement of access to the “structural axes” represented by federal highways BR-174, BR-163 and BR-158, which cut the state from north to south in the west, center, and east, providing access to the terminals.

The program targets the paving of 3,000 kilometers of highways by the end of 2006, when governor Blairo Maggi’s term in office ends.

According to Vetoratto, at the beginning of his term, in January 2003, just 2,000 of the 26,000 kilometers of highways in the state were paved.

Last year, another 509 kilometers were paved with tarmac; another 1,000 km should be tarmaced by the end of 2004, 1,000 km more in 2005, and the rest in 2006.

The government is in charge of half the value estimated for the project (around US$ 345 million) and the city halls and producers will cover the other 50%.

Agreements have been established with 46 consortiums made up of city halls and producers (around 50 in total), which, at the end of the project should be able to charge for use of the highways.

“With these constructions, the state of Mato Grosso will have 5,000 kilometers of paved state highways, on which 90% of agricultural production and 80% of passenger traffic should be moved,” stated Vetoratto.

But there is still much to be invested and it will be hard for large projects to take place without the participation of private companies.

Despite expansion of the railway, the government of the state of Mato Grosso hopes that, by the end of the year, the federal government establish a tender for the paving of two stretches of the BR-163 highway, which are still dirt roads connecting state capital Cuiabá to Santarém, in the northern Brazilian state of Pará.

“Lack of paving causes losses of US$ 100 million as the highway could make it possible for more producers to compete,” stated Vetoratto.

ANBA – Brazil-Arab News Agency


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