Impact of Transportation Policies on Competitiveness of Brazilian and U.S. Soybeans: From Field to Port

Because of increased international consumption, soybeans have become one of the world's top commodities. Brazil and the United States, the world's two largest soybean exporters, possess unique agricultural commodity infrastructure schemes for production and transportation. The goal of this paper is to examine the differences between transportation systems and infrastructure of the two countries, and look at how these differences affect their respective commodity transportation policies. A theoretical overview of the essential role transportation plays in business logistics is followed by an analysis and comparison of the Brazilian and U.S. transportation systems. Drawing on previous U.S. Department of Agriculture studies of U.S. and Brazilian commodity transportation, landed cost price formation analyses are performed, taking into account production, internal transportation, and freight tariffs. Examples of landed cost price formation are also given to enrich the information provided. It is shown that in certain cases Brazilian internal soybean transportation costs can represent 230% more than those of the United States. On the basis of the literature review, the effect of transportation policies on the total landed cost of soybeans on the world marketplace are examined, as are reasons for why Brazilian soybeans suffer a competitive disadvantage from field to port. The current situation and what could be done to potentially improve Brazilian internal transportation policies is also discussed.