Shifting horizons for global trade 2014 IGC

Transcription

1 1/6/214 Shifting horizons for global trade 214 IGC GRAINS CONFERENCE Brazil s logistics from farm gate to FOB Andy Duff Head of Food and Agribusiness Research, Rabobank, Brazil International Grains Council Conference 214 Brazil s logistics from farmgate to FOB Andy Duff, Head of Food & Agribusiness Research, Rabobank Brazil 1

2 1/6/214 Rabobank Brazil rural banking network Balsas MA Querência MT Palmas TO Lucas do Rio Verde MT Tangará da Serra MT Cuiabá MT Barreiras BA Brasília DF Patos de Minas MG Uberlândia MG Rondonópolis MT Chapadão do Sul MS Araçatuba SP Ribeirão Preto SP São Paulo SP Varginha MG Rio Verde GO 179 Brazilian infrastructure, past and present: a wellknown story of underinvestment... Annual GDP growth (av ) 1.% 9.% 8.% 7.% 6.%.% 4.% 3.% 2.% 1.% Gross Fixed Capital Formation vs GDP growth S Africa Peru Indonesia Malaysia Colombia Chile Thailand Mexico Russia India South Korea China.%.% 1.% 2.% 3.% 4.%.% Qualit y of roads Quality of railway s 1 Qualit y of ports RANKING HIGHEST Gross Fixed Capital Formation as % GDP (av ) LOWEST GDP growth Log. (GDP growth) World Economic Forum Global Competitiveness Report Source: World Bank, World Economic Forum 18 2

3 1/6/214...leading to high logistics costs and a corresponding impact on competitiveness USD per metric ton Transport cost (soybeans, Mato Grosso) vs FOB price 26% % % % FOB price less overland freight % % Overland freight, Mato Grosso - Santos % 29% % Overland freight (as % of FOB price) 18% % Source: IMEA, ABIOVE, Rabobank 181 Infrastructure and agribusiness what is being done? 1 Grain storage 2 Transpor t & ports 182 3

4 1/6/214 Grain storage Storage capacity is low in key regions... Current grain storage capacity versus expected growth in grain output to 223 7% Source: CONAB, Rabobank Ideal = 12% Soybean & corn production Grain storage capacity XX% Storage capacity as % prod n 184 Projected annual growth in grain production to 223 6% % 4% 3% 2% 1% 1 MAPITOBA 22 CENTRE-WEST (MT, GO, MS) 11 SOUTH (PR, SC, RS) % % 1% % Bubble size represents growth in grain output (mn mt) to 223 SOUTHEAST (SP, MG, ES, RJ) Current ratio of storage capacity to production 4 4

5 1/6/214 Lack of storage = lack of choices at harvest time Seasonality of soybean price, Rondonópolis MT (1 = average price over the entire year) Peak harvest High demand for transport Off-season Ja n Fe b Ma r Ap r Ma y Ju n Ju l Au g Sep t Oc t No v De c Source: ABIOVE, Rabobank 18 Storage capacity is low in key regions, but the issue is being addressed... June 213 New financing for grain storage announced: R$ 2 bn over years Ideal = 12% May 214: R$ 4bn disbursed Soybean & corn production Grain storage capacity XX% Storage capacity as % prod n Source: CONAB, Rabobank 186

6 1/6/214...and this should improve the situation... Million tonnes (production and storage capacity) * 22 * Storage capacity/production (%) Production of soybeans & corn Storage capacity Storage capacity/production (%) Projected storage capacity/production (%) Ideal storage capacity/production (%) Source: CONAB, Rabobank and this should improve the situation... Million tonnes (production and storage capacity) * 22 * Storage capacity/production (%) Production of soybeans & corn Storage capacity Storage capacity/production (%) Projected storage capacity/production (%) Ideal storage capacity/production (%) Source: CONAB, Rabobank 188 6

7 1/6/ Storage capacity/production (%) Million tonnes (production and storage capacity)...but more resources will be required to achieve ideal storage capacity levels, owing to production growth * 22 * Production of soybeans & corn Projected storage capacity/production (%) Storage capacity Ideal storage capacity/production (%) Storage capacity/production (%) Source: CONAB, Rabobank 189 Transport & ports

8 1/6/214 Transport situation Brazil: transport of all cargo, 213 Road: 61% Rail: 21% Water: 14% Roads Railways 1.7 million kilometres 12% paved (213) Quality Very good...1% Good...26% Regular...3% Bad...21% Very bad...8% 28, kilometres of track, much of it old Average speed 2 km/hr 1% operated via concessions to private sector 94% operated via concessions to private sector Brazil: transport of grains to ports, 213 Road: 3% Rail: 36% Water: 12% Source: CNT, Associação Brasileira de Concessionárias Rodoviárias, Associação Nacional de Exportadores de Cereais 191 Initiatives to boost investment in transport over the years: PAC, PAC2, and, most recently, the PIL Public Private Billion Reais (const. 213) 3 2.3%.3% 2.2% Source: IPEA, Banco Central do Brasil Brazil: investment in transport 6 Investment in transport (% GDP) %.4% % 7.6%.6% Among the difficulties encountered in disbursing funds and executing projects: Poorly conceived projects Multiple agencies involved, high levels of bureaucracy Long delays in issuing of licences The PAC and PAC 2 were largely government initiatives With the introduction of the PIL, there is a clear focus on creating greater private sector involvement in infrastructure projects Roads Railways Ports Airports 8

9 1/6/214...current transport infrastructure is stretched, above all in the South/Southeast region Distribution of soybean and corn production & availability for export North % Total production % Total export availability 6% 82% NORTH ROUTE 6% Distribution of soybean and corn exports by region, 213 NORTHEAS T ROUTE 8% % Total production South % Total export availability 44% 18% SOUTH/SOUTHEAST ROUTE 86% Export corridor Projected export corridor Source: CONAB, SECEX, Rabobank 193 What is the strategy to improve transport logistics? 1 CREATE NEW FLOWS OUT OF THE NORTH NORTH ROUTE 6% Distribution of soybean and corn exports by region, 213 NORTHEAS T ROUTE 8% 2 ADDRESS THE BOTTLENECK S IN THE SOUTH SOUTH/SOUTHEAST ROUTE 86% Export corridor Projected export corridor Source: CONAB, SECEX, Rabobank 194 9

10 1/6/214 Where are changes taking place? Current Road Railway Waterway Port Major grain region Future Rio Branco Porto Velho Itacoatiara Madeira 364 Amazonas Tapajós Lucas do RV Paraguai Santarém Miritituba 163 FICO Cascavel Vila do Conde 18 Açailândia Balsas 363 Palmas LEM Uruaçu Rondonópolis Anápolis Alto Araguaia Ferroban São Simão Três 163 Lagoas Tiete Ferroban Ferroeste 277 FNS EFC Paranaguá Itaqui FIOL Santos 242 Salgueiro Pecém Transnordestina Cotegipe Ilhéus Vitória Suapé SF Rio Grande 19 Recent developments (213 & 214) Santarém Vila do Amazonas Conde Itaqui April 214: Bunge makes its first shipment of soybeans from Mato Grosso via Miritituba and a new terminal in Vila do Conde Miritituba 163 Current Road Railway Waterway Port Major grain region Future March 214: Gov`t signs contracts awarding concessions for highway BR-163 (MT) and BR-163 (MS) to private sector players Lucas do RV Rondonópolis Alto Araguaia Palmas FNS Uruaçu Anápolis Santos Paranaguá May 214: opening of part of the FNS railway between Anápolis (GO) and Palmas (TO) Oct 213: extension of railway to link Rondonópolis (MT) with the port of Santos Ports of Santos and Paranaguá: measures to improve efficiency, e.g. strict scheduling of truck arrivals, expansion of truck holding areas 196 1

11 1/6/214 Medium term developments the northern export corridor (1) Expansion of current capacity Porto Velho to Itacoatiara Current Future Porto Velho Itacoatiara Santarém Vila do Amazonas Conde Lucas do RV Miritituba 163 Expansion of Bunge terminal; tender of 1 new grain terminal in Vila do Conde (214) and up to 3 new grain terminals in port of Outeiro Tender of new grain terminal in Santarém (214); expansion of current terminal Road Railway Waterway Port Major grain region! 1% asphalt surfacing of BR- 163 between MT and Miritituba currently expected to be completed by end 21 Alto Araguaia Expansion of number of terminals in Miritituba (7 companies own land, awaiting licences to construct terminals). Expected total investment USD 1. billion 197 Medium term developments the northern export corridor (2) Itaqui Inauguration of new grain terminal TEGRAM expected for July 214; initial capacity 1.2 mn mt/year, with major expansion projected to 217 EFC Açailândia Palmas Current Future FNS Road Uruaçu Railway Anápolis Waterway Port Major grain region

12 1/6/214 Longer term developments the northern export corridor! Removal of rocks along 43 km of the Tocantins river to enable barges to travel from Marabá to Vila do Conde and other Amazon ports ( ) Vila do Conde Açailândia Itaqui Possible rail link between Açailândia and Vila do Conde (feasibility study concluded, completion unlikely before 22) Road Railway Waterway Current Future Lucas do RV 18 Palmas FNS FICO Uruaçu Rondonópolis Anápolis Construction of locks on the Tocantins and Araguaia rivers to bring grain from Mato Grosso, Tocantins & Goias to northern ports via waterway (22 22) Port Major grain region 199 Possible longer term developments rail Itaqui Açailândia Palmas Road Railway Current Future Lucas do RV FNS FICO Uruaçu Rondonópolis Anápolis FIOL Ilhéus Waterway Port Major grain region FICO railway: work yet to begin, completion likely to be to 6 years after contract awarded FIOL railway originally scheduled to be complete in mid-213, but is well behind schedule 12

13 1/6/214 Developments in the southeast & south Current Road Railway Waterway Port Major grain region Future Investment of USD 6 mn programmed for Tietê-Paraná waterway to more than double capacity by 217 (currently handles 2 3 mn mt grain annually) Paraguai Alto Araguaia Ferroban Três Lagoas Ferroban Cascavel Ferroeste São Simão Tiete 277 Paranaguá SF Rio Grande Santos Vitória Licences issued (March 214) for duplication of rail tracks between Campinas and Santos; operating company indicates that the project will raise annual soybean capacity will rise from 18 mn mt to 3 mn mt from 21 Government expects new round of tenders (214) for port investments in Santos to generate USD 2 mn in investments to raise grain capacity by 77% 21 Medium term possibilities for grain export by port Santarém Vila do Itaqui/ São Luis 3 7 Conde Itacoatiara 2 2 Salvador X Grain exports 213, million tonnes Vitória X Possible grain exports by 218, million tonnes Santos Paranaguá São Francisco do Sul 6 Rio Grande 22 13

14 1/6/214 Conclusions Strong private sector interest in developing northern ports Timing of development depends on access (BR-163 surfacing and widening) and licences/tenders for infrastructure in Miritituba, Vila do Conde etc An optimistic view of the development of the northern ports would suggest little medium term increase in grain shipments out of southern ports However, investments in southern ports should in any case lead to greater efficiencies and lower costs, as well as ensuring adequate capacity on a longer term horizon The expansion of logistics capacity relative to grains exports should reduce logistics costs. Benefits will apply not only to grain exports, but also to fertilizer imports (Brazil imports 7% of its fertilizer needs) The on-farm impact of such changes would be an increase in grain margins per hectare, boosting profitability and competitiveness