The Potential Impact of Brazil’s Transportation Efficiencies on World Cotton Trade

Delmy L. Salin

This paper is a summary of Transportation Infrastructure in Brazil: Impacts and Implications for Global Cotton Trade, by Rafael de Farias Costa, C. Parr Rosson, III, and Flynn J. Adcock http://cnas.tamu.edu/ Publications/Brazil Cotton Transportation Report June 2012.pdf  

Brazil is the third largest cotton exporter after the United States and Uzbekistan. Cotton production in Brazil expanded from 2 million bales in the late 1990s to about 9.3 million bales in 2011. In 2007, Brazil began a comprehensive logistical investment plan to increase competitiveness in the world agricultural market. To increase transportation efficiencies, the Brazilian Government wants to reduce export route distances and port congestion by shifting exports from the southern ports to the north and northeast port regions. Texas AgriLIFE Research scientists estimated the impact of Brazil improvements in transportation infrastructure on cotton production, prices, and exports. Transportation costs for different regions within Brazil were estimated to reflect movements from mill to port. An origin-destination matrix of the Brazilian cotton industry that tracks cotton flows within the country was developed and validated. Findings indicate that a 2- to 3-percent transportation cost reduction would not have a significant impact on the world cotton trade. However, the United States may benefit slightly Brazil main cotton export routes from a 2-percent cost reduction, increasing exports by 640 bales, raising prices 2 cents a bale, and growing revenue by $457,900. If transportation costs drop by 10 percent, Brazilian exports could increase by 64,830 bales, raising prices by $3.61 per bale and increasing revenue by $27.8 million. India and the United States might lose market share. U.S. losses could include 4,490 fewer bales exported at a price of $0.28 less per bale and lower cotton export revenues of $5.7 million.

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