South America Calling

Brazilian Farmers Take Out Nearly $2 Bln In Silo Financing

Brazilian farmers have accessed R$4 billion ($1.8 billion) from a new line of financing for the construction of silos this season, according to a director at Brazil's largest silo maker.

As part of Brazil's Storage Plan, the government made R$5 billion ($2.3 billion) in financing available in 2013-14 (July-June) and is due to make another R$5 billion available next season

But despite the initiative, the South American grain giant will continue to have a huge storage deficit for some time, according to Joao Tadeu Franco Vino, superintendent at Kepler Weber, which supplies approximately 50% of all silos in Brazil.

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Speaking at the Agrishow farm show in Riberao Preto, Sao Paulo state, he pointed out that Brazil only has capacity to store 146 million metric tons of grains, not enough for the projected 2013-14 grain crop of 200 mmt and well short of the ideal level, which is 120% of total production.

The deficit of on-farm storage magnifies Brazil's well-publicized logistical shortfalls.

With little storage capacity on the farms, growers in the new grain regions of the center-west and northeast are forced send soybean and corn crops directly to the elevators. Since the elevators also lack capacity, they ship the grains on to port, which get snowed under by a deluge of soybeans come high season.

This all contributes to soybean transport costs, which are up to four times higher than in the U.S.

But while many farmers are accessing funds for silos, they are being frustrated by the delays in obtaining environmental licenses and long lead-in times for delivery.

Many farmers are looking at short-term solutions, most notably silo bags. The polyurethane tubes that can hold soybeans for up to a year have become a regular sight across the center-west in the last couple of years.


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