Brazil’s Transportation Infrastructure and Competitiveness in the Soybean Market

By Xi He, Guilherme DePaula, and Wendong Zhang


In 2013, Brazil surpassed the United States to become the world’s largest soybean exporter. As figure 1 shows, Brazil’s soybean production and exports have accelerated since its trade liberalization in the mid-1990s, and it has gained extra competitiveness over the United States in the export market during the US-China trade war, when China imposed several waves of retaliatory tariffs on US soybeans. For interested readers, a tool is available on the CARD website that shows historical revealed comparative advantages for six leading export countries. In the 2019/20 marketing year, Brazil’s soybean exports reached 92 million metric tons (MMTs), about twice that of US soybean exports (USDA 2021). While Brazil’s increasing competitiveness in the oilseed market depends critically on its advanced soybean production technology, its adaptation of a double-cropping soy-corn system in the savanna (DePaula and Fortes 2019), extended periods of currency depreciation (Valdes et al. 2020), and declining transportation costs resulting from expanding transportation infrastructure network (He et al. 2021) are key factors as well.


Figure 1. US and Brazil soybean production and exports, 1980/81–2020/21.
Source: USDA’s Production, Supply, and Distribution Datasets (USDA 2021).


Brazil’s soybean production and road network expansion

Over the past four decades, Brazil’s soybean production expansion came with a drastic shift of major production areas. Figure 2 shows that the major soybean production area shifted from the traditional agricultural region in the south to the agricultural frontier in central-west Brazil, especially in the state of Mato Grosso. Major reasons for this shift include Brazil’s long-term strategy to cultivate the Cerrado savanna, greater investment in the soybean industry by multinational firms since the trade liberalization, and the international price surges in the mid-1990s that stimulated soybean production in South America (Gale et al. 2019).


Figure 2. Brazilian municipality-level distribution of soybean harvested area in 1980 and 2017.
Source: IBGE (2020).


Over the same period, Brazil’s transportation network has also expanded significantly, facilitating its soybean exports. Figure 3 shows Brazil’s major road network in 2017 and all ports that have ever exported soybeans. The two major ports for exporting soybeans are the Santarém port in the north and the Santos port in the southeast. Most Brazilian soybeans exported to China were from northern Mato Grosso to Shanghai via the Santos port in the southeast. However, when Brazil finished paving a stretch of BR-163 from North Mato Gross to Miritituba port in November 2019, the time needed to truck soybeans from Mato Grosso to the northern terminal in Miritituba was cut from 3 days to 1.5 days (USDA 2021), making the northern ports no longer a mere alternative to Brazil’s southern ports but a key to accommodating central Brazil’s ever-expanding grain and oilseed production (CONAB 2020).


Figure 3. Brazil’s major road network in 2017 and BR-163.
Note: This figure shows Brazil’s major road network in 2017 and the BR-163. Data come from Brazil’s National Department of Transport Infrastructure (DNIT 2020).



To further look at the impacts of the paving of BR-163 on Brazil’s soybean transportation costs and how that adds to Brazil’s cost advantages over the United States, figure 4 presents the decomposition of farm gate price and various transportation costs of transporting Brazilian and US soybeans to Shanghai, China in 2006, 2010, 2015, and 2020. We show the costs of three routes: from the northern Mato Grosso to Shanghai; China via the Santos port in the south and via the Santarém port in the north; and, from Davenport, Iowa, to Shanghai via the US port of New Orleans.


Figure 4. Average production and transportation costs of transporting Brazilian and US soybeans to Shanghai, China, 2006, 2010, 2015, and 2020.


Note: This figure shows the average farm gate price and transportation costs of transporting Brazilian soybeans from northern Mato Grasso to Shanghai, China, via the Santos port in the south and the Santarém port in the north, as well as transporting US soybeans from Davenport, Iowa, via the US Gulf of Mexico. Data come from USDA soybean transportation guide (Salin 2021). Note that the route from northern Mato Grosso to Shanghai, China, via the Santarém port in the north was not commonly used until the recent paving of BR-163. In addition, production costs are also lower in Brazil. See for details.


In 2006 and 2010, the farm gate price of Brazilian soybeans was lower than that of US soybeans, but due to its high domestic transportation costs, the landed price of US soybeans in China was lower than that of Brazilian soybeans. However, in 2015 and 2020, which covers the paving of BR-163, the costs of transporting soybeans from northern Mato Grosso to Shanghai, China via the Santarém port decreased significantly, making the landed price of US soybeans in China higher than that of Brazilian soybeans.

The shift in soybean transport routes is evident in Mato Grosso. In 2012, only 14.5% of Mato Grosso’s grain outflow followed the northern route (North Arch ports). In 2020, for the first time, most of Mato Grosso’s grain outflow, 53.1%, followed the North Arch in Brazil (IMEA 2020). Mato Grosso’s exports have continued to grow as producers in the state move their products north—China’s soybean imports from Mato Grosso totaled 12.74 million tons in 2019, compared with a total of 16.64 million tons imported from the United States (IMEA 2020). The emergence of Mato Grosso as a competitor in the global soybean export market also signals a shift broader than transportation modes. The Mato Grosso model integrates the technological changes that enabled soybean adaptation to the savanna in a multiple-cropping system in super large farms highly capitalized and integrated into the multinational trading market. Large portions of the new investments in logistics and transportation are private and follow decades of expansion of the Mato Grosso export model. The Brazilian government and many international companies continue to prioritize transportation infrastructure projects that facilitate the export of agricultural products. Several important railroad projects under consideration include the north-south (EF-151) road, the West-East Integration Railroad (EF-334), and the Ferrogrão Railroad (EF-170), which will be adjacent to BR-163 and is expected to alleviate traffic conditions on BR-163 by serving as an alternative route for soybean and corn exports. These projects are likely to further reduce Brazil’s domestic transportation costs, which will likely put further pressure on US soybean competitiveness.


Companhia Nacional de Abastecimento (CONAB). 2020. “Paving of the BR-163 reduces freight costs for agricultural products through Arco Norte”.

Departamento Nacional de Infraestrutura de Transportes (DNIT). 2020. National Road Plan and National Road System.

DePaula, G., and A. Fortes. 2019. “The Adaptation of Soy-corn Double-cropping to the Brazilian Savanna.” Agricultural Policy Review, Spring 2019.

Gale, F., C. Valdes, and M. Ash. 2019. “Interdependence of China, United States, and Brazil in Soybean Trade.” US Department of Agriculture Economic Research Service report, 1–48.

He, X., G.M. DePaula, and W. Zhang. 2021. “Roads, Trade, and Development: Evidence from the Agricultural Boom in Brazil.” AAEA conference paper, 2021 annual meeting, August 1–3, Austin, Texas.

Instituto Brasileiro de Geografia e Estatística (IBGE). 2020.

Mato Grosso Institute of Agricultural Economics (IMEA). 2020.

Salin, D. 2021. “Soybean Transportation Guide: Brazil 2020.” US Dept. of Agriculture, Agricultural Marketing Service.

US Department of Agriculture (USDA). 2021. Production, Supply, and Distribution Datasets.

Valdes, C., K. Hjort, and R. Seeley. 2020. “Brazil’s Agricultural Competitiveness: Recent Growth and Future Impacts under Currency Depreciation and Changing Macroeconomic Conditions.” US Department of Agriculture, Economic Research Service No. 305689.


1. The central-west area of Brazil produced 60.6% of Brazil’s soybeans in the 2020/21 marketing year.

2. Brazil’s extended periods of currency depreciation and macroeconomic fluctuations have also contributed to its emergence as a competitor for the United States in global agricultural markets (Valdes et al. 2020).

Suggested citation:

He, X., G. DePaula, and W. Zhang. 2021. "Brazil’s Transportation Infrastructure and Competitiveness in the Soybean Market." Agricultural Policy Review, Fall 2021. Center for Agricultural and Rural Development, Iowa State University. Available at