Grain handling in Argentina 9906026
June 01, 1999
by Teresa Acklin
Having achieved many improvements to its grain handling system, Argentina still has many problems to solve.
By Roberto D. Hajnal
Agriculture in Argentina in recent years has given birth to an agro-industry focused on exports. Today, Argentina is among the world's leaders in exports of wheat, soybeans, sunflowerseed and corn, and ranks as the world's fifth-largest producer of agro-food and the eighth-largest food exporter.
Argentina is the eighth-largest country in the world in terms of land area (2.8 million square kilometers), with 35.5 million people and a vast surface of natural resources. A wide temperate belt, the Pampas, is ideally suited for agricultural production. The fertile plains of the Pampas has a cultivated surface of over 26.5 million hectares and a global crop production of over 64 million tonnes.
One of the most productive and efficient grain-producing countries in the world, Argentina has remained surprisingly competitive in a world marketplace that has been flooded by large supplies of subsidized grain from the United States and Europe. Argentina is the only major grain exporting nation that not only has no subsidies but until 1991 even had export taxes of about 25%.
Argentina has accomplished this growth despite having perhaps the most expensive and inefficient grain-handling infrastructure of any of the sophisticated grain producing nations worldwide, including an obsolete and inferior inland transportation system.
The complexities of the Argentine situation have been shaped by the nation's changing political goals over the past 50 years, by a series of ups and downs in the structure of the grain sector and by economic problems, especially inflation and the resulting weakness of the national currency.
To understand the magnitude of these difficulties, Argentina had an average inflation of 340% per year between 1980-85, peaking at 5,000% in 1989.
It is difficult to imagine how, in a situation when all the economic parameters were absolutely overflooded to unimaginable levels, life went on and projects were developed. Because of innovative solutions that minimized investment and maximized performance, the Argentine grain industry managed to grow in an inflationary culture.
Improvements in production, exports, infrastructure and markets began in 1991 with the elimination of grains export taxes, privatization, lower tariffs, deregulation and liberalization of commerce, new marketing tools, currency stability and the creation of the Mercado Comun del Sur, or MERCOSUR as it is commonly known. MERCOSUR brought together the markets of the four member countries, Argentina, Brazil, Paraguay and Uruguay, and associated countries of Chile and Bolivia, to create an open and free system of trade.
MERCOSUR today is the world's third-largest economic block four times the size of the European Community with 225 million people and a G.N.P. of U.S.$1,000 billion. The MERCOSUR countries produce 35% of the world's soybean production and 10% of world maize production.
As a result of several major policy changes, Argentina began addressing problems in its grain handling systems and infrastructure. Farmers, operators and suppliers emerged from the chaotic inflationary period with enhanced skills wiser, and with creative solutions. Argentina has since achieved higher crop yields, modernized its storage and transportation systems and developed sophisticated marketing mechanisms.
Grain production in Argentina has tripled in the past 25 years. The 1997-98 harvest was over 64 million tonnes, up from 21.7 million tonnes in 1974.
Total grain storage capacity in 1998 was 49 million tonnes, up from 30 million in 1984. Farmers hold about 27% of the country's total storage capacity, up from 10% only 10 years ago.
Although exports take up most of the gap between production and storage capacity, Argentina still has large storage deficits at certain times of the year. Between February and August, piles of sorghum or sunflowerseed often are stocked on the ground in the open air, sometimes even uncovered, resulting in an important loss of weight and quality.
During harvest, a significant percentage of grain is stored directly on trucks waiting to discharge at elevators and port terminals. Receiving capabilities are being improved by upgrading capacities at inland facilities and port terminals and by building more storage facilities with faster truck unloading capabilities.
But there is a truck shortage in Argentina. Because there are few self-discharging trucks, many large storage facilities, processors and port terminals have installed faster, more efficient hydraulic dumping platforms for trucks and trailers. The 20-meter platforms can discharge a load of 30 tonnes every three minutes, or 600 tonnes per hour. Short platforms of 8 meters need more unloading time because the truck and trailer are unloaded separately. These dumping stations can unload only 120 to 150 tph.
Most grain storage facilities have flat platforms that weigh trucks or rail cars. Only larger port or industry facilities have batch scales to check and control in-load and out-load. All port terminals have weighing towers with hopper scales for out-loading to ships.
Hand sampling is predominant in about 95% of all installations, but the trend is moving toward automated sampling.
There are a variety of silos bins and buildings in Argentina, but vertical steel silos made of either welded carbon steel or bolted galvanized steel are the most common and are normally less expensive than concrete silos.
There was a boom in steel silo construction in Argentina in the 1960s and 1970s. At this time there were over 100 local manufacturers of steel silos and handling equipment, but most disappeared during the 1980s, a decade with the highest inflation in the country's history. Those companies that survived had financial problems or changed ownership.
Another construction boom began in 1992, as new policies supported an open market for free import and low duties. These policies further weakened local silo manufacturing companies, but created strong competition between the world's leading manufacturers of steel silos and grain handling equipment.
Concrete silos built in the 1920s are still in use in port facilities, railway stations and industries. Pre-cast concrete silos with angular walls French technology also competed against steel silos in the 1970s and 80s.
Despite their higher cost, slip-formed concrete silos are still preferred in projects that require storing large capacities (10,000 tonnes to 20,000 tonnes per bin) in the smallest possible space. The single largest concrete bin in use in Argentina is the 32,500-tonne silo at the Port of San Lorenzo.
Horizontal silos (flat storage), inspired by the Brazilian “silos graneleiros,” are used at large storage facilities to handle big harvests. Horizontal storage is the most economical solution for difficult flowing products soybean pellets, cotton seeds, fertilizers, peanuts and for large bulk storage in facilities from 10,000 tonnes and up.
Enormous capacities have been achieved in this type of storage, mainly in the oilseed industry. Some large horizontal storage installations can be found at the Aceitera General Deheza complex in Cordoba (750,000 tonnes) and the Louis Dreyfus facility at General Lagos (700,000 tonnes).
Horizontal silos also are used at port facilities where classification is not as crucial. Terminal 6 at Puerto San Martin holds 460,000 tonnes in nine horizontal silos. Large horizontal silos also are found at ports along the Parana River (San Lorenzo, San Martin and Rosario).
Underground silos, a type of flat storage built for government installations in Argentina in the 1960s, need very complicated handling operations that require many man hours. Many are still in use. These underground stores have a full hopper dug below grade, with a brick or ceramic cover and no mechanical handling equipment just a long hole with openings in the roof for loading and unloading with portable equipment and manual labor.
The only dome silo in Argentina is a three-dome, 40,000-tonne fertilizer storage facility at an import river terminal in San Nicolas owned by Agrium, a Canadian company.
IMPROVING GRAIN QUALITY.
Much effort has gone into improving drying, aeration and mechanical handling methods in Argentina to prevent grain quality problems after harvest.
About 60% of Argentina's grain production has to be dried. About 30% to 35% of wheat production is dried because it is harvested early to free up the land for the second crop, usually soybeans. When this second crop is harvested, the silos are partially full with the first crop.
Energy efficiency of dryer technology has been improved by recovering heat systems, and some progress has been made with liquified gas, resulting in lower fuel costs and less environmental pollution. There is much to do, however, in teaching operators how to dry grain and how to improve locally manufactured dryers.
Most storage facilities in Argentina are equipped with aeration systems or with grain cooling after drying (dryeration). The big question is always, “To push or pull?” But the poor efficiency of aeration systems, coupled with overdrying of grain, has led to higher costs and quality degradation. The choice of fans is not always correct. There are too many helicoidal fans in high silo bins and centrifugal fans are not always used where recommended.
With the emphasis on grain quality and increased scrutiny of technical specifications and performance before purchases are made, the quality of mechanical handling equipment also has improved. Leading manufacturers of this equipment in recent years have found business in Argentina. Top-quality equipment is usually found in port terminals and industrial facilities because of the large capacities required.
Imported steel pressed buckets and high-density polyethylene buckets has improved bucket elevator performance in Argentina, and imports of electronic hazard monitors for elevators and other conveyors illustrates increased concern for safety.
Local suppliers of plastic buckets have copied shapes and sizes, but typically use low-quality polyethylene. These buckets look the same but wear out sooner. It will take some time for the market to recognize what is good and what is bad.
Higher receiving capacities and newer harvest machines that emphasize capacity and clean poorly have resulted in more dust in the delivered product. This increased dust and has created a serious environmental problem around Argentine silo facilities and port terminals. Many installations are being equipped with dedusting systems, mainly cyclones of low efficiency. Belt cleaners, bag filter collectors, truck receiving hoppers with dedusting systems also are being installed.
Grain, oilseed and seed processing facilities and port terminals have contributed to the search for quality, capacity and performance. The Argentine flour milling industry consists of 11 companies operating 85 mills. Six milling companies currently account for about 60% of local flour sales, and the industry has a daily milling capacity of 23,000 tonnes.
Most flour mills have been modernized to achieve greater efficiency, and new mills are being built to replace older, less efficient ones. Because installed capacity is higher than domestic consumption, there is great export potential. Tremendous competition has made the flour milling industry fight for survival, with big economic losses in the sector.
Many of the most modern and sophisticated oilseed extraction plants in the world today are located in Argentina. With the evolution of Argentina's oilseed processing industry in the 1990s, the country has become the world's second-largest soymeal exporter, behind Brazil. Between 1995-98, more than U.S.$400 million was invested in capacity expansion of existing plants, construction of new facilities and improvements in the storage, handling and transportation infrastructure.
Total daily capacity is estimated at 84,000 tonnes, distributed among 60 plants. About 60,000 tonnes per day comes from solvent extraction plants, crushed in 31 facilities. The average capacity per plant is about 2,000 tonnes per day, with some notable exceptions. The Louis Dreyfus soybean facility at General Lagos has a daily crush of about 8,500 tonnes per day. Cargill, Inc.'s Quebracho facility crushes 6,900 tonnes per day and the André Group's La Plata cereal facility at Puerto San Martin crushes 6,500 tonnes per day.
Argentina's export terminals can load about 40,000 tonnes of grain per hour and have storage capacity of about 3.9 million tonnes distributed among 24 ports. In 1996-97, over 16 million tonnes of grains and nearly 11 million tonnes of by-products were shipped out of Argentine ports. Loading capacities to ships range from 800 tonnes per hour to 3,200 tph. The system moves about 5 million tonnes of grain each month.
The Rosario-San Lorenzo-San Martin port complex handles about 56% of all Argentine grain shipments and 87% of all by-product shipments. The Parana River has been dredged to a depth of 32 feet to accommodate Panamax vessels.
Port terminals have undergone substantial expansion since 1980. Some modern installations include Cargill's terminals at Quebracho and Bahia Blanca, the Glencore-Toepfer terminal at Bahia Blanca and the Louis Dreyfus terminal at General Lagos. But the jewel is Terminal 6 at Puerto San Martin.
Terminal 6 opened in 1987 with a modern and extended layout. There are no elevator legs only long inclined belt conveyors that load and unload at a rate of 600 tph, and a shipping capacity of 1,800 tph. Discharging facilities can unload 250 rail cars and 1,000 trucks per day. A barge unloading facility receives cargoes from up-river producers.
Last year, about 4 million tonnes of dry bulk agro-products were shipped through Terminal 6. The port is being expanded for mineral exports, with a new berth and loading facility.
Although Argentina historically has exported bulk agro-products, many import terminals have been adapted or are being constructed to unload fertilizers and other bulk chemical products. Ship unloading capacities at these terminals are generally about 500 tph.
BULK LOGISTICS PROBLEMS.
The privatization of much of the transportation and handling infrastructure in Argentina has resulted in major improvements in its rail service and port facilities. But bulk handling is where Argentina encounters its biggest problems, with only 216,000 km (130,000 miles) of highways, of which only 30% are paved, and 38,000 km (23,000 miles) of rail.
Despite an inadequate road network, about 80% of grain transport in Argentina is done by truck. Roads and highways are narrow, with regions of dense traffic. The privatization of national routes did not bring any sensible improvement, and tolls are expensive for almost no service.
Trucks and trailers are box type, and carry about 30 tonnes. Most are not self-unloading, which is why many facilities have installed hydraulic dumping platforms to speed their discharge. A few companies have incorporated 12-meter (40-foot) trailers with discharge hoppers, but there are few trucks of this type in Argentina.
The inadequate number of trucks and the receiving capacity at silos often causes a real bottleneck during harvest.
About 20% of Argentina's grain and oilseeds is transported by rail. The freight rail network has been organized into five private companies, mainly managed by American and Canadian operators, which improved service and lowered freight costs by about 25%. But what passed to private hands was old or obsolete, with low or no maintenance of cars and locomotives. Improvements are slow because of high investment costs.
The future lies in upgrading rail service and offering more and new hopper cars with larger capacities. In Argentina, a full train of 40 rail cars, each holding 40 tonnes, moves only 1,600 tonnes at a time. Compare this with the United States, where larger 100-car units, each holding 100 tonnes, can move 10,000 tonnes at a time.
Argentina's river system also is undergoing significant investment and upgrades. The waterway north into Paraguay, Bolivia, Uruguay and Brazil is being developed so that products from those countries can be brought in larger quantities by barge for processing and export through Argentina.
The Parana-Paraguay river system includes 3,700 km (2,200 miles) of navigable river with locks or dams. Barges carry up to 6 million tonnes of agro-industrial products.
Most ports along the Parana River use grab cranes to unload barges. Few, if any, pneumatic unloaders have been installed.
The MERCOSUR river system, which adds about 7,000 km (4,200 miles), is not fully navigable but barge handling is expanding rapidly.
Argentina has made many improvements to its grain handling system and infrastructure. The grain industry, including handling, storage and transportation, continues to lower costs, improve quality and increase production. Still, there are many problems to solve.
Grain storage capacity must continue to expand. Crop loss and loss at storage facilities must be controlled. The ability to dry grain, especially high moisture maize, must be improved. It also is important to upgrade train shuttles to lower freight costs, incorporate self-unloading trucks, offer better service at silo facilities, reduce costs in grain harvest operations and provide educational training for plant operators.
The Asociación Argentina Post-cosecha de Granos (APOSGRAN), an association similar to the Grain Elevator and Processing Society in the United States, is working hard to develop improved grain handling operations in Argentina. The two groups recently signed an agreement to explore a strategic alliance, which could include an “operations exchange” and technical tours as well as Spanish versions of GEAPS' grain operations, safety and health programs, to be marketed in all Latin American countries. We welcome this opportunity to work together.