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August 21, 2017

Brazil Minister Guarantees No More Problems in Highway BR-163

The Brazilian Minister of Transportation, Ports, and Civil Aviation, Mauricio Quintella, guaranteed last Thursday that there will not be any further transportation problems on highway BR-163 in northern Brazil resulting from heavy rains. Last February, very heavy rains shut down the unpaved section of the highway for several weeks resulting in thousands of trucks being stuck in huge traffic backups for weeks.

BR-163 is virtually the only way to reach the central Amazon River from much if central Brazil. At the northern end of BR-163 are the ports of Miritituba and Santarem. The Port of Miritituba has numerous barging operations where soybeans and corn are loaded onto barges for transport to ports near the mouth of the Amazon River. The Port of Santarem is capable of loading ocean going vessels with grain even though it is approximately 500 miles upriver from the mouth of the Amazon (straight line air miles).

On BR-163 there are approximately 100 kilometers waiting to be paved. Work on a 35 kilometer section is already underway and it will be advanced enough when the rainy season arrives in December-January-February to allow for continuous truck traffic. Work has not yet started on the remaining 65 kilometer section, but the Minister of Transportation indicated last Thursday that the R$ 128.5 million needed to pave that section has been transferred to the department in the Brazilian Army responsible for the paving. Paving of that section has been given the top priority.

The 65 kilometer section will be graded and a roadbed of rock will be in place by the end of the year which will allow for trucks to pass through even though the entire paving project will not be completed until later in 2018.

The blockage last February resulted in the ports on the Amazon River to run low on soybeans and numerous vessels had to be rerouted to other Brazilian ports resulting in millions of dollars of losses.

Even though the highway may be improved enough physically to allow truck traffic, that does not mean there won't be temporarily blockages going forward. Since BR-163 is the only major highway in Mato Grosso, it is a very tempting target for protestors wanting to garner attention to their grievances. The highway is routinely blocked by truck drivers protesting high fuel prices and low freight rates, by landless rural residents protesting the government slow progress in agrarian reform, by indigenous people protesting encroachment on the tribal lands, by school teachers, government workers, bank employees etc. wishing to highlight their cause.

Therefore, even after the paving is complete, we can still expect temporary problems along the highway. The only way to solve this problem is to have more than a single highway moving grain out of the main grain producing region of Brazil.

Over the past decades, grain production in Brazil has moved further and further north in the country, but the infrastructure did not accompany the expansion in production. According to the Soybean and Corn Producers Association of Mato Grosso (Aprosoja), Brazil's northern ports will handled 13% of Brazil's grain exports from the 2016/17 production and the percentage will continue to increase as infrastructure improves.