Storage Deficit Threatens Competitiveness

According to Cristiano Oliveira, Head of Research at Rivool Finance, logistics and storage deficiencies remain significant challenges for Brazilian agribusiness. Data shows that storage capacity, equivalent to 91% of agricultural production in 2010, dropped to about 60% in 2023.

This figure falls well below the FAO's recommendation of 1.2 times annual production capacity. Meanwhile, countries like the United States and Canada have significantly higher rates, with 54% and 80% of farms equipped with storage infrastructure, respectively, compared to just 15% in Brazil.

“With record harvests expected in 2024 and a severe grain storage deficit, export prices for soybeans and corn are below international market levels. The first forecast for the 2024/2025 grain harvest, released by CONAB, points to production of 322.47 million tons,” he notes.

This gap is especially critical in the Midwest region, the country’s largest grain-producing area. In Mato Grosso, for instance, storage capacity covers only half of its production. This forces producers to sell during harvest, facing high freight costs and lower prices in international markets. With the 2024/2025 harvest projected at 322.47 million tons—an 8.3% increase over the previous cycle—the deficit will likely exert even more pressure on prices.

“Every year, there is an investment deficit of at least R$ 5 billion in storage infrastructure, while the sector suffers losses of R$ 20 billion. There is significant return potential for producers and investors in this sector, particularly in bulk storage (silos), along with great opportunities for expanding private credit to address this gap. With less bureaucratic credit sources tied to project performance, all stakeholders stand to benefit from the gains that Brazil’s export-driven commodity sector will generate in the coming decades,” he concludes.