FARGO – It's important to know your competition, Walter Lanza told a room of farmers before detailing the difficulties farmers have transporting soybeans in Brazil.
Lanza, a graduate student studying agricultural economics at North Dakota State University, is from Brazil. He talked about impassable roads, inefficient railroads and trucks that can take weeks to unload at the North Dakota Soybean Council's Soybean Marketing and Risk Management seminar held recently in Fargo.
"You need to know about what your biggest competitor is doing so you can get a game plan to try to do better," Lanza said. "Brazil and the United States are neck-and-neck when it comes to soybean exports."
Cindy Pulskamp, who farms soybeans, wheat and sugarbeets with her husband, Neal, near Hillsboro, N.D., said local farmers need to think globally.
"We're used to working with our local elevators," she said. "Now we have to start watching the world market a lot closer."
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Brazil "is in a pretty bad situation" economically, Lanza said. The only sector still doing OK is agribusiness, he said. But transportation tribulations are taking their toll on Brazilian farmers.
"From freight to port, it's way more expensive to transport soybeans in Brazil versus the U.S.," he said.
Transportation in Brazil accounts for 40 percent of the price of grain, compared to 10 percent in the United States, Lanza said.
Trucks are the primary transportation method in Brazil, but more than 80 percent of roads are unpaved.
"Dirt roads in the U.S. would be very good roads in Brazil," he said.
Trucks can be backed up for more than 18 miles waiting to be unloaded, and it can take up to two weeks for trucks to unload, Lanza said.
"Here people complain if it takes 10 hours," he said.
Between old trucks and bad roads, Lanza said "2 to 3 percent of the soybeans literally fall from the trucks."
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Railroads are inefficient and prioritize iron ore over grain, Lanza said. Ports are expensive and slow with wait times of up to 60 to 70 days.
Other issues farmers face are they do not have the infrastructure to store grain or the money to build nice bins, and Lanza said corruption is rampant.
"Everything in Brazil, if you want things a little bit faster, you've got to bribe someone," he said. "That's the reality of it. You see it at all levels."
Brazil is working on a more than 1,000-mile road, BR-163, dubbed the "Soybean Highway," but Lanza said progress is slow and the road is in very bad shape.
"Potholes will swallow trucks and buses," he said. "If there's a little bit of rain, trucks cannot get through."
Listening to Lanza, Pulskamp said, "was definitely an eye opener."
"If they do streamline things better, they're going to be a true competitor in the market," she said. "Right now I think a large amount of production makes them a competitor, but if their efficiencies increase, we're really going to see it affect our markets."
But Lanza said he expects those improvements are a long way off.
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"The joke is Brazil is a country of the future and forever will be," he said. "Although Brazil has grand plans to make it better and get better roads and improve the port and the whole supply chain logistics, in Brazil everything is so slow so even when they launch a program, it takes years to catch on and sometimes they just give up on a lot of initiatives."
