What are the main logistical challenges facing Brazilian agriculture?

In recent years, Brazilian agribusiness has substantially increased its production. Brazil has increased its grain production by an average of 5% per year since 2000, reaching a record 350,2 million tons in the 2024/25 harvest, according to Conab (Brazilian Agricultural Association). The sector's exports last year totaled US$164,3 billion, eight times higher than at the beginning of this century.

On the other hand, Brazil's logistics infrastructure is progressing slowly and is not keeping pace with this growing agricultural production. Besides Brazil being a country of continental dimensions, which makes any movement of cargo throughout the territory even more challenging, the unbalanced transportation matrix and the significant storage deficit also make logistics for Brazilian agriculture costly. The result of this "logistics nightmare" is a paradox the sector has long faced: the greater the production, the greater the problems. The data collected reveals the bottlenecks faced by agribusiness in marketing its products domestically and abroad.

The analysis of Brazilian agribusiness logistics can be conducted from two perspectives: transportation, which encompasses existing road systems for transporting and transporting agricultural and agro-industrial products; and storage, which encompasses the inventory and storage structure of agricultural production. In both areas, Brazil presents weak results that are not compatible with the sector's production level.

Figure 1: Evolution of grain production and Brazilian infrastructure, based on 100 = 2014, between 2014 and 2024

The Brazilian transportation network can be divided into three main modes: road, rail, and waterway. During colonial Brazil, transportation was rudimentary, with river and sea navigation being the only means of transportation within the territory. In the late 19th century, the first railways were built, running through the country's main coffee-producing regions and connecting them to ports. However, integration between Brazilian regions was not a priority at that time. Only after 1930 did highways begin to gain a share of the transportation network, with the 1950s being the turning point, when investment in road transport expanded significantly at the expense of rail and waterway, which have since lost ground in the country's freight transportation.

As a result, Brazil's transportation network has become concentrated on highways. It is estimated that Brazil has approximately 1,5 million km of highways, of which only 13,7% is paved, resulting in a total length of 213,5 km, according to the National Transportation Confederation. Waterway and rail transport have relatively smaller infrastructure, covering approximately 20,4 and 30,6 km, respectively. Roads account for 65% of all freight transportation in Brazil, a high share compared to other countries, such as the USA (approximately 56%), Australia (36%), the European Union (25%), and Ukraine (9%), based on OECD data.

In the case of agribusiness, this concentration is also evident, both in the transportation of grains and inputs. According to data from Esalq-Log, the transportation of soybeans, corn, and fertilizers in Brazil is primarily carried out by road—approximately 68,8%, 75,6%, and 86%, respectively. The high share of road transport extends to grain exports and input imports, as 44,7% and 54,2% of the country's corn and soybeans exports are transported by truck, respectively, as is 84% ​​of imported fertilizers. 

In contrast, the share of waterways and railways in grain movement and outflow is smaller and decreasing, contrary to an efficient logistics model. Approximately 22% and 16,5% of soybean and corn production was transported by rail, respectively, while 9% and 8% of transportation was carried by waterways. Regarding exports, 33,4% and 38,9% of soybean and corn transported to ports were by freight trains, respectively, significantly lower than in 2010, when these shares were 47% and 77,5%, respectively. Waterways saw an increase in the share of grain outflow, particularly corn, largely due to the expansion of ports in the Northern Arc. In 2010, 8% and 2,5% of soybean and corn exports were transported by navigable waterways, respectively, compared with the current 12,4% and 16,4%. Even so, these percentages are not enough to reduce agribusiness's dependence on road transport.

Because of this, the sector is dependent on an inefficient and expensive means of transportation for long distances. Road freight transport has low energy efficiency, as a soybean truck, for example, consumes approximately 1 liter for every 2 kilometers traveled – considering a route between Sorriso and Santos. This translates into higher freight costs. Approximately 70% of the logistics cost of exporting grains to China is due to domestic transportation, even though the sea route is longer than the land route. The same problem arises when importing inputs, as freight rates for trucks transporting fertilizers have increased 21% in real terms since 2010, due to rising fuel prices and high demand for these inputs. Amid record harvests, transportation costs tend to rise, leading to lower margins for producers. One way to hedge against this risk is to store the grains to sell later in the year when freight is less expensive and grain prices are more favorable.

However, storage in Brazil is equally problematic as road infrastructure. Despite growing faster than the transportation network, Brazil's grain storage infrastructure also fails to keep pace with grain production, generating a storage deficit. Currently, the country can store around 70% of its grain, a smaller capacity than the US, which can store an average of 150% of its harvest. Furthermore, around 80% of Brazilian storage capacity is not on-farm, but off-farm, making producers more dependent on third-party storage services, giving them less decision-making power in the marketing of their produce. Among the minority who have storage facilities on their properties, only 41,2% are able to store more than 75% of their production and obtain economic gains in sales planning, according to a study conducted by the Esalq-LOG group and the CNA. Therefore, it is notable that, despite being a mechanism for increasing producer profitability, storage is still not within their reach.

Thus, several grain storage alternatives have been adopted. One, most commonly used in regions with greater storage deficits, is "storage on wheels," in which grain transport trucks serve as mobile warehouses. However, this practice has a structural problem, as during harvest, there is a strong demand for trucks, leading to increased freight costs and a shortage of vehicles to transport the grain. Another option is the use of bag silos (a temporary, mobile storage system made with a layered polyethylene bag), which has been adopted by 19% of producers to avoid high freight costs and obtain better prices during the off-season. The biggest bottlenecks for agribusinesses investing in their own storage facilities that allow for high long-term profitability are high construction costs, difficult access to credit (a CNA survey shows that 25% of producers are unaware of specific credit lines for storage), and lack of working capital.

Overcoming the so-called "logistics nightmare" requires a structural transformation of the national infrastructure. To achieve this, a shift in the transportation matrix is ​​recommended, with strategic and accelerated investments in railways and waterways, which are more efficient for long distances, without neglecting road networks, especially local ones. In storage, the priority should be to encourage in-house infrastructure on farms, with public policies focused on accessible credit, the dissemination of technical knowledge, and the integration of investment funds into the sector. For logistics to cease being agribusiness's scarcest nutrient and become its competitive advantage on the global stage, the sector must unite efforts to ensure these measures come into effect as soon as possible.

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