Brazilian agribusiness has gained dramatic global significance. Grabbing the attention of the international grain industry is the fact that for the first time Brazil’s soybean exports, an estimated 26.2 million tonnes, are expected to surpass U.S. shipments of 24.2 million in 2003-04. This is in great part due to the country’s significant 54% production increase in just three seasons to an estimated 60 million tonnes in 2003-04 — compared with an 11% decline in U.S. production to an estimated 66.7 million tonnes in 2003-04.
As a result of increased quality, low production costs and growing sophistication in grain handling, the competitiveness of Brazil’s market will continue to intensify and become more aggressive.
The Brazilian economy with its fluctuations and highly detrimental periods of inflation has created difficulties for the last few decades. Some believe the situation for Brazilian agriculture is more difficult due to the country’s low producer subsidies, as compared with other countries whose higher subsidies can be seen as unilaterally favoring their economies. Yet Brazil’s ban on genetically modified soybeans has secured certain export markets that are wary of GM soy, particularly Europe.
This market certainty is in question in the aftermath of the country’s announcement in late 2003 that it will officially allow GM soy plantings, which already were widespread due to black market GM soybean seeds. In efforts to preserve its export markets, Parana, Brazil’s top soybean producing state, banned GM soy plantings, causing havoc in Brazil’s soybean transportation logistics. Controversy remains between the country’s government, individual states and public in regards to GM policy, and a resolution is yet to be seen. (For more information on Brazil and its GM dilemma, also see this month’s Country Focus on Brazil, on page 22.)
Brazil has quite varied agricultural productivity within its huge territory. Besides the great climatic variations, farm and grain handling systems range from rudimentary planting/picking processes in small properties to those of the so-called "precision agriculture," which is rapidly being introduced in big farms. This is enabling farms to reach higher productivity and more competitive rates per cultivated hectare. This, allied to the expansion of planted areas, is considerably increasing the production of grains in the country and the profitability of the sector. It has been leveraged, too, by the apparent stability of the last six years, associated with lowered export taxes and infrastructure improvements.
There is a growing need for structuring Brazil’s production chain, investing in all areas and changing traditional practices that, until now, have resulted in intolerable losses — most of which are totally controllable factors, such as the storage facilities and the distribution channels.
Brazilian agriculture has much room for growth in terms of arable land, infrastructure, cost and quality improvements. Thus, considerable investments are being made and a consequent increase in primary production is being seen.
The production of major grains (maize, soybean, rice, wheat and black beans), has grown from 2,455 billion bushels (65.8 million tonnes) in 1996 to 3,616 billion bushels (96.9 million tonnes) in 2001. The increase in the agricultural productivity is a direct result of the technological advances of precision agriculture, not to mention the research advances in genetics, plant disease control and organic products.
However, till now, considerable losses of grains have occurred due to the lack of operating knowledge, lack of infrastructure, poor operation of transportation/processing equipment, improper handling of products and technically outdated storage. But these problems are being solved gradually through specific investments in equipment and in personnel training.
There is still a lag in the total storage capacity, and there is also the issue of the "localization" of the storage units, which still are highly concentrated around port areas or in industrial centers, far from the production areas. Some big companies are beginning to operate collection units and spreading them strategically, in the proximity of production areas.
BASIC GRAIN PROCESSING DETAILS
Weighing. Usually, grain is weighed on road or railroad platforms, and this may also be done on the same truck unloading platform, within the hopper. In general, the controls are electronic, with a wide range of automation and interconnectivity with other processing stages. On rare occasions, large facilities use batch flow scales, in order to weigh the product at the entrance or at the exit.
The port terminals usually have towers with flow scales, for ship loading/unloading. Weighing on conveyor belts is used mainly for internal control.
Sampling. The use of instruments and automated systems for sampling is still not common in Brazil; most storage facilities use collectors and manual procedures.
Reception. In the last few years, there has been significant improvement in grain receiving speed. Yet measures to further increase reception still need to be implemented to further eliminate the waiting lines of trucks trying to unload grain. The prime reason is a lack of trucks during harvest and consequently very high freight costs. Another reason is the need for immediate grain processing due to the high moisture rates of the grain. Because of the predominantly tropical and subtropical climate in Brazil, there is a great risk of deterioration of the grains if they remain humid or warm for a long period.
Allied to this, the use of high-performance systems that allow storage of grains with typically 16% and 17% moisture content is increasing, and so a large portion of the drying operations is being transferred to the warehouse, which requires just a fast pass of the grains through the mechanical dryers in order to remove a smaller percentage of moisture. Altogether, these procedures increase the reception speed, reducing operating costs and preserving grain quality.
As a result, it has been necessary to adjust conveyor operating flow for these higher reception speeds. Nowadays, country facilities operate at up to 300 and sometimes 600 tonnes per hour and most port terminals run at more than 1,200 tph. The hydraulic platforms to unload the trucks typically operate at speeds from 250 to 500 tph.
Grain Cleaning. Due to high temperatures and/or high air humidity found in several parts of the country, together with the poor soil preparation and harvest methods, the percentage of impurities and of sand mixed in with the grains is usually very high (more than 5%). So, the pre-cleaning operation (before drying) and the cleaning operations (after drying) are crucial for the processing of grains and seeds.
The cleaning operation after drying is not always necessary, but the pre-cleaning is imperative because it provides a more uniform grain drying; increases grain flow inside the dryers; increases drying capability and storage volume; reduces fire risks; improves the conservation of the stored grains; and reduces the occurrence of moisture migration and incidence of insects and fungi.
Smaller facilities still use inefficient cleaners that require much manpower. At larger cooperatives and cereal centers, pre-cleaning/cleaning requires more cost-effective solutions. High-capacity 300-tph pre-cleaners and cleaners provide better operation, more efficiency, lower manpower needs and dust collection systems.
Storage. Among the silos and storehouses that store nearly 90 million tonnes of grains in Brazil, there is a wide range of storage models and capacities used.
Vertical Silos. Among the vertical silos, the concrete ones are the most traditional, featuring solidity, long life, and low maintenance costs. However, due to their higher capital costs, presently they are being restricted to port facilities and to higher capacity cells (15,000 tonnes or more).
In the 1970s, many manufacturers of metallic silos appeared, and their use is quite popular in farms and high-capacity facilities. Brazilian manufacturers include Kepler Weber, Comil, Casp, Armco, Pagé and others. More recently, branches of North American GSI and of the European Sangati and Prado have had some participation.
The implementation of metallic silos is interesting due to their dimensioning options, lower capital costs and increased ability to separate grains when necessary.
Horizontal Silos. Much used in Brazil, horizontal silos store anywhere from 30,000 up to 400,000 tonnes, and are mostly used for soybeans and maize. Usually the bottom and the walls are brick or concrete, covered by concrete or metal. Generally, it is the most economic storage option, with lower storage costs per bushel for big facilities.
To diversify use of the horizontal silo, for instance to also store machinery or packaged product, the storehouses are built with a flat bottom or with a "semi-V" (sloped and flat) bottom. In a semi-V design there is a slope (45º or more) between the walls and the flat area.
To optimize grain conveying and storage capacity, those with a full "V-shaped" bottom are used often, allowing unloading without manual intervention, as happens with the other models.
Drying. Usually the drying systems are the bottleneck for grain reception. As grain moisture tends to be very high, a dryer is needed to get grain to 16% or 17% moisture before storage, where it can be aerated for further drying. The drying ranges for the several kinds of grain storage and processing systems are indicated in Table 3.
There are many dryer models, such as the jig, column and fluid bed, with either concurrent flow, countercurrent or transverse flow. In spite of the technological advances introduced, many dryers are not able to perform their tasks without damaging grain quality. This occurs either due to the equipment characteristics or due to operator inefficiency, because training is still unsatisfactory in most storage operating facilities.
To partially solve this problem, some silos are equipped with an aeration system designed for further drying to reduce the need of mechanical drying and increase reception speed. For example, when reducing the moisture from 22% to 14%, a dryer can handle nearly 30 tph of maize. When moisture is reduced from 22% to 17%, the same dryer will handle 50 to 60 tph.
In most facilities the dryer is still fuelled by firewood. There is a search for alternatives, mainly due to environmental issues, but the option for natural gas is quite limited because of the supply network, and liquid propane gas (LPG) is not viable because of its higher cost. Some units make use of production byproducts such as rinds or hulls, but they have limited use.
Aeration. It is imperative that the storage facilities have well-designed aeration systems for grain preservation. To store grains even with a low moisture rate in silos without this resource may result in grain losses due to high grain "breathing" rates caused by the ambient temperatures of up to 40ºC (104°F) or higher. It is not unusual to see losses up to 10% of grains inside silos.
"Dryeration" in the storehouses has been more intensively adopted in the last 5 to 7 years, as manufacturers have supplied automated systems for this purpose. Yet it is still quite common to see stored grain with a moisture rate between 16% and 20%, and up to 27% in some cases.
In general, Brazil has several methods of promoting aeration in silos. These include systems using either ambient air or processed to conserve already dried and cooled stored products as well as systems for cooling the dry product once in storage.
One of the storage problems is the formation of hot spots. It is worse with products of higher moisture content, increasing the risk of losses inside the storehouses and silos. There are several models of silo filling spreaders in the market that try to find a solution for this situation.
Mechanical conveyors. Brazil has many conveyor suppliers. Cooperatives, cereal centers and light industry demand higher capacity conveyors, which Kepler Weber, Comil, Pagé, and Tecno Moageira Ltda. all supply. Recent models have introduced improvements to correct historical deficiencies of conveyors. Nowadays Brazilian conditions are very favorable compared to international standards, have a good quality level and quite competitive prices.
Within the current global market, the relative costs of grain transportation in Brazil are still higher than desired. This is mainly due to the fact that 74% of the products are distributed using roads, 23% by railroad and only 3% by river.
Transportation costs are considered high by the contracting parties yet they do not satisfy the carriers due to the high costs of fuel, lubricants and accessories as well as the excessive wear on vehicles from poor road conditions.
It may be observed that in 1995, a company used road transportation between the State of Mato Grosso (Rondonópolis) and the port of Paranaguá, at a cost of U.S.$1.47 per bushel. In the U.S., for the same distance between the state of Illinois and the Gulf, the costs were about U.S.$0.35/Bu. The port fees were around U.S.$0.24/Bu. in Brazil, and in the U.S., they were about U.S.$0.08/Bu. Fortunately in the last few years, logistics have improved.
In general, there is a search for less onerous options, such the river transportation. But road transportation is still used much more, in spite of its high costs. River transportation occurs mainly in the west and north regions of the country, where the road accesses are more precarious. The development of waterways is receiving the attention of private initiatives through significant investments, which certainly will benefit the market.
The country relies on several ports, and the most important are Vitória, Santos, Paranaguá, São Francisco do Sul and Rio Grande (sea ports) and, more recently, Itacoatiara (river port), exporting grain and bran.
In recent years, an important evolution of the Brazilian port structure has taken place because of the development of excellent equipment such as conveyors and unloaders for granaries. This is a result of the new policies and guidelines of the port administration brought about by their privatization.
As mentioned earlier, a significant expansion of Brazil’s cultivated area is predicted, leading to greater agricultural production. However, a significant reduction of producers is forecast, mainly due to automation and to the rural exodus that still occurs in spite of all the efforts made with the intention of keeping the rural population in the countryside. This means that fewer people will produce more, at lower costs and higher profitability.
Brazil’s growing dominance in soybean production is a trend capturing global attention, particularly the United States. Table 5 compares the conditions of soybean production in the top two producing countries.
Each of these variables should be carefully analyzed and may result in a different view of the real competitive conditions of different countries. It can be said that Brazil is "waking up" to the need to achieve international quality standards, a qualified work force, and investment in research, technology and infrastructure. This may increase competitive potential. But the major role will have to be performed by private enterprise, because no one knows exactly what the contribution of the new government will be to this sector.
Further Brazil/U.S. grain handling differences
Brazil: Commonly uses the "turn-key" method.
U.S.: Often uses an engineering company and contractor, with suppliers for different equipment/machinery.
Brazil: Uses mainly horizontal silos. Costs range from U.S.$10.00 to $12.50/tonne capacity for flat bottom horizontal silos, and U.S.$12.00 to $14.00/tonne capacity for "V" sloped bottom silos.
U.S.: Uses mainly bins or vertical silos. Costs range from U.S.$16.00 to $19.00/tonne capacity.
Brazil: Grains are typically cleaned at farms and country silos before the first storage. Higher average temperature and higher foreign material lead to more difficult grain temperature control and a higher risk of grain storage losses. For cleaning, rotary and static scalpers were used in the past. Today, orbital deck cleaners with high air aspiration systems are common. Brazil’s grain with high moisture rates often overcharges the cleaners. Several companies clean the grain as much as they can and store foreign material and dockage separately to lower fuel expenses for dryers, improve storage, and reduce quality or weight losses.
U.S.: Grains are most often cleaned at industry facilities and ports, in part because the U.S. sees lower dockage and foreign material levels than Brazil due to better seed varieties and harvesting equipment, higher operator qualification, more land flatness and less field contamination. Cleaning equipment is commonly rotary or static scalpers with no or low air volume aspiration. There is a high number of cleaning companies, but grain conservation is not as good as it could be.