On-Farm Grain Storage in Brazil Continues to be Problematic

A persistent problem for Brazilian farmers continues to be a lack of on-farm grain storage and grain storage construction has not kept pace with the ever-expanding grain production in Brazil. According to a study conducted by the Agriculture and Livestock Confederation of Brazil (CNA), approximately 15% of farms in Brazil have on-farm storage.

The study interviewed 1,065 rural producers concerning their storage situation and their attitude toward the construction of new storage facilities. Approximately 73% of the farmers interviewed said they looked at new storage facilities, but a lack of credit and high interest rates were prohibitive. Other obstacles included adequate qualified labor, investments in energy distribution infrastructure, and inadequate rural roads.

A lack of on-farm storage puts farmers at a disadvantage. On-farm storage facilities would allow farmers to sell their crops later when prices may have improved instead of at harvest time when prices are usually pressured. Transportation costs are hugely important in Brazil with truck freight rates usually peaking at time of harvest. If farmers could wait to move their grain at a later time, just the saving in transportation costs alone could go a long way to paying for storage construction.

The government has tried to encourage grain storage construction by offering subsidized lower interest loans, but with limited success. Farmers complain about the bureaucracy and environmental requirements needed to qualify for loans.

Tags: grain, Brazil, prices, Production, construction, storage facilities, on-farm grain storage